OUTFRONT Media Inc. - Quarter Report: 2019 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from	to

Commission File Number: 001-36367

OUTFRONT Media Inc.

(Exact name of registrant as specified in its charter)



Maryland		46-4494703
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

405 Lexington Avenue, 17th Floor New York, NY		10174
(Address of principal executive offices)		(Zip Code)

(212) 297-6400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	o

		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes x No

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	OUT	New York Stock Exchange

As of May 7, 2019, the number of shares outstanding of the registrant’s common stock was 141,634,725.

Table of Contents

OUTFRONT MEDIA INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2019

TABLE OF CONTENTS



PART I	3
Item 1. Financial Statements (Unaudited)	3
Consolidated Statements of Financial Position as of March 31, 2019, and December 31, 2018	3
Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018	4
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019 and 2018	5
Consolidated Statements of Equity for the three months ended March 31, 2019 and 2018	6
Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018	7
Notes to Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	50
Item 4. Controls and Procedures	51
PART II	53
Item 1. Legal Proceedings	53
Item 1A. Risk Factors	53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3. Defaults Upon Senior Securities	53
Item 4. Mine Safety Disclosures	53
Item 5. Other Information	53
Item 6. Exhibits	53
SIGNATURES	55

Table of Contents

PART 1

Item 1. Financial Statements.

OUTFRONT Media Inc.

Consolidated Statements of Financial Position

(Unaudited)



	As of
(in millions)	March 31, 2019			December 31, 2018
Assets:
Current assets:
Cash and cash equivalents	$	52.7		$	52.7
Restricted cash	1.4			1.4
Receivables, less allowance ($10.7 in 2019 and $10.7 in 2018)	229.1			264.9
Prepaid lease and transit franchise costs	13.4			69.3
Prepaid MTA equipment deployment costs (Note 18)	31.1			18.9
Other prepaid expenses	15.3			13.9
Other current assets	8.7			8.4
Total current assets	351.7			429.5
Property and equipment, net (Note 5)	654.7			652.9
Goodwill	2,080.7			2,079.7
Intangible assets (Note 6)	532.0			537.2
Operating lease assets (Note 4)	1,327.8			—
Prepaid MTA equipment deployment costs (Note 18)	71.1			60.6
Other assets	59.0			68.8
Total assets	$	5,077.0		$	3,828.7

Liabilities:
Current liabilities:
Accounts payable	$	53.3		$	56.5
Accrued compensation	24.4			47.1
Accrued interest	26.0			19.1
Accrued lease and transit franchise costs	40.7			44.2
Other accrued expenses	32.9			31.2
Deferred revenues	37.3			29.8
Short-term debt (Note 9)	155.0			160.0
Short-term operating lease liabilities (Note 4)	153.8			—
Other current liabilities	15.1			14.7
Total current liabilities	538.5			402.6
Long-term debt, net (Note 9)	2,185.7			2,149.6
Deferred income tax liabilities, net	17.5			17.0
Asset retirement obligation (Note 7)	34.4			34.2
Operating lease liabilities (Note 4)	1,166.5			—
Other liabilities	42.5			80.0
Total liabilities	3,985.1			2,683.4

Commitments and contingencies (Note 18)

Stockholders’ equity (Note 10):
Common stock (2019 - 450.0 shares authorized, and 141.6 shares issued
and outstanding; 2018 - 450.0 shares authorized, and 140.2 issued and outstanding)	1.4			1.4
Additional paid-in capital	2,012.0			1,995.0
Distribution in excess of earnings	(941.9		)	(871.6		)
Accumulated other comprehensive loss	(20.2		)	(22.0		)
Total stockholders’ equity	1,051.3			1,102.8
Non-controlling interests	40.6			42.5
Total equity	1,091.9			1,145.3
Total liabilities and equity	$	5,077.0		$	3,828.7

See accompanying notes to unaudited consolidated financial statements.

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OUTFRONT Media Inc.

Consolidated Statements of Operations

(Unaudited)



	Three Months Ended
	March 31,
(in millions, except per share amounts)	2019			2018
Revenues:
Billboard	$	251.0		$	239.3
Transit and other	120.7			98.6
Total revenues	371.7			337.9
Expenses:
Operating	216.9			197.1
Selling, general and administrative	73.3			64.6
Restructuring charges	0.3			1.1
Net gain on dispositions	(1.5		)	(0.2		)
Depreciation	21.1			21.1
Amortization	24.7			22.5
Total expenses	334.8			306.2
Operating income	36.9			31.7
Interest expense, net	(32.7		)	(30.0		)
Other income (expense), net	0.1			(0.1		)
Income before benefit for income taxes and equity in earnings of investee companies	4.3			1.6
Benefit for income taxes	1.0			6.7
Equity in earnings of investee companies, net of tax	0.8			0.8
Net income	$	6.1		$	9.1

Net income per common share:
Basic	$	0.04		$	0.06
Diluted	$	0.04		$	0.06

Weighted average shares outstanding:
Basic	140.7			138.8
Diluted	141.1			139.1

See accompanying notes to unaudited consolidated financial statements.

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OUTFRONT Media Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
Net income	$	6.1		$	9.1
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments	2.6			(5.4		)
Net actuarial gain	—			0.3
Change in fair value of interest rate swap agreements	(0.8		)	—
Total other comprehensive income (loss), net of tax	1.8			(5.1		)
Total comprehensive income	$	7.9		$	4.0

See accompanying notes to unaudited consolidated financial statements.

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OUTFRONT Media Inc.

Consolidated Statements of Equity

(Unaudited)



(in millions, except per share amounts)	Shares of Common Stock		Common Stock ($0.01 per share par value)		Additional Paid-In Capital			Distribution in Excess of Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity			Non-Controlling Interests			Total Equity
Balance as of December 31, 2017	138.6		$	1.4	$	1,963.0		$	(775.6	)	$	(7.7	)	$	1,181.1		$	45.5		$	1,226.6
Net income	—		—		—			9.1			—			9.1			—			9.1
Other comprehensive loss	—		—		—			—			(5.1		)	(5.1		)	—			(5.1		)
Stock-based payments:
Vested	0.9		—		—			—			—			—			—			—
Amortization	—		—		5.0			—			—			5.0			—			5.0
Shares paid for tax withholding for stock-based payments	(0.3	)	—		(7.4		)	—			—			(7.4		)	—			(7.4		)
Dividends ($0.36 per share)	—		—		—			(50.9		)	—			(50.9		)	—			(50.9		)
Other	—		—		—			—			—			—			0.1			0.1
Balance as of March 31, 2018	139.2		$	1.4	$	1,960.6		$	(817.4	)	$	(12.8	)	$	1,131.8		$	45.6		$	1,177.4

Balance as of December 31, 2018	140.2		$	1.4	$	1,995.0		$	(871.6	)	$	(22.0	)	$	1,102.8		$	42.5		$	1,145.3
Cumulative effect of a new accounting standard (Note 2)	—		—		—			(24.8		)	—			(24.8		)	—			(24.8		)
Net income	—		—		—			6.1			—			6.1			—			6.1
Other comprehensive income	—		—		—			—			1.8			1.8			—			1.8
Stock-based payments:
Vested	0.9		—		—			—			—			—			—			—
Amortization	—		—		5.3			—			—			5.3			—			5.3
Shares paid for tax withholding for stock-based payments	(0.4	)	—		(7.7		)	—			—			(7.7		)	—			(7.7		)
Class A equity interest redemptions	0.1		—		2.8			—			—			2.8			(2.8		)	—
Shares issued under the ATM Program	0.8		—		16.5			—			—			16.5			—			16.5
Dividends ($0.36 per share)	—		—		—			(51.6		)	—			(51.6		)	—			(51.6		)
Other	—		—		0.1			—			—			0.1			0.9			1.0
Balance as of March 31, 2019	141.6		$	1.4	$	2,012.0		$	(941.9	)	$	(20.2	)	$	1,051.3		$	40.6		$	1,091.9

See accompanying notes to unaudited consolidated financial statements.

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OUTFRONT Media Inc.

Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
Operating activities:
Net income	$	6.1		$	9.1
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization	45.8			43.6
Deferred tax benefit	(0.1		)	(2.3		)
Stock-based compensation	5.3			5.0
Provision for doubtful accounts	1.0			(0.8		)
Accretion expense	0.6			0.6
Net gain on dispositions	(1.5		)	(0.2		)
Equity in earnings of investee companies, net of tax	(0.8		)	(0.8		)
Distributions from investee companies	0.7			0.2
Amortization of deferred financing costs and debt discount and premium	1.4			1.4
Cash paid for direct lease acquisition costs	(14.0		)	(12.5		)
Change in assets and liabilities, net of investing and financing activities:
Decrease in receivables	35.1			42.8
Increase in prepaid MTA equipment deployment costs	(22.7		)	(7.2		)
Increase in prepaid expenses and other current assets	(3.2		)	(7.4		)
Decrease in accounts payable and accrued expenses	(24.3		)	(18.9		)
Increase in deferred revenues	7.5			13.6
Decrease in income taxes	(1.7		)	(4.5		)
Other, net	6.2			0.4
Net cash flow provided by operating activities	41.4			62.1

Investing activities:
Capital expenditures	(18.1		)	(16.8		)
Acquisitions	(7.5		)	(4.1		)
MTA franchise rights	(5.4		)	(1.4		)
Net proceeds from dispositions	2.2			0.2
Return of investment in investee companies	0.1			—
Net cash flow used for investing activities	(28.7		)	(22.1		)

Financing activities:
Proceeds from long-term debt borrowings	35.0			10.0
Proceeds from borrowings under short-term debt facilities	15.0			57.0
Repayments of borrowings under short-term debt facilities	(20.0		)	(45.0		)
Proceeds from shares issued under the ATM Program	16.6			—
Taxes withheld for stock-based compensation	(7.6		)	(6.5		)
Dividends	(51.8		)	(51.1		)
Net cash flow used for financing activities	(12.8		)	(35.6		)

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OUTFRONT Media Inc.

Consolidated Statements of Cash Flows (Continued)

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019		2018
Effect of exchange rate changes on cash, cash equivalents and restricted cash	0.1		(0.2		)
Net increase in cash, cash equivalents and restricted cash	—		4.2
Cash, cash equivalents and restricted cash at beginning of period	54.1		48.3
Cash, cash equivalents and restricted cash at end of period	$	54.1	$	52.5

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	0.8	$	0.2
Cash paid for interest	24.5		20.8

Non-cash investing and financing activities:
Accrued purchases of property and equipment	$	9.4	$	11.0
Accrued MTA franchise rights	1.8		—
Taxes withheld for stock-based compensation	0.1		1.0

See accompanying notes to unaudited consolidated financial statements.

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business and Basis of Presentation

Description of Business

OUTFRONT Media Inc. (the “Company”) and its subsidiaries (collectively, “we,” “us” or “our”) is a real estate investment trust (“REIT”), which provides advertising space (“displays”) on out-of-home advertising structures and sites in the United States (the “U.S.”) and Canada. Our inventory consists of billboard displays, which are primarily located on the most heavily traveled highways and roadways in top Nielsen Designated Market Areas (“DMAs”), and transit advertising displays operated under exclusive multi-year contracts with municipalities in large cities across the U.S. and Canada. We also have marketing and multimedia rights agreements with colleges, universities and other educational institutions, which entitle us to operate on-campus advertising displays, as well as manage marketing opportunities, media rights and experiential entertainment at sports events. In total, we have displays in all of the 25 largest markets in the U.S. and approximately 140 markets across the U.S. and Canada. We manage our operations through three operating segments—(1) U.S. Billboard and Transit, which is included in our U.S. Media reportable segment, (2) International and (3) Sports Marketing.

Basis of Presentation and Use of Estimates

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (the “SEC”). In the opinion of our management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. Certain reclassifications of prior year’s data have been made to conform to the current period’s presentation. These financial statements should be read in conjunction with the more detailed financial statements and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 27, 2019.

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Note 2. New Accounting Standards

Adoption of New Accounting Standards

Leases

In the first quarter of 2019, we adopted the Financial Accounting Standards Board’s (the “FASB’s”) guidance addressing the recognition, measurement, presentation and disclosure of leases for both lessees and lessors using the transition method to adopt the new lease standard. The transition method allows entities to apply the new lease standard at the adoption date rather than adjusting each period presented at the date of adoption. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases regardless of their classification.

We elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry forward our historical lease classification. We also elected the practical expedient related to land easements, which allowed us to carry forward our accounting treatment for land easements on existing leases. In addition we elected the hindsight practical expedient which resulted in increasing the length of our lease term for existing leases with cancellation provisions.

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

At adoption, we had approximately 23,600 lease agreements as lessee, all of which were classified as operating leases. On January 1, 2019, the adoption of this standard resulted in the recognition of an operating lease liability of $1.2 billion and a right-of-use operating lease asset of the same amount. Existing prepaid and accrued lease costs were reclassified to the right-of-use operating lease asset, resulting in a net asset of $1.3 billion on the Consolidated Statement of Financial Position. As a result of the adoption of this standard, we also recorded a cumulative-effect adjustment of $24.8 million to beginning Distribution in excess of earnings on the Consolidated Statement of Equity for lease costs which would have been recognized in prior periods as a result of the change in the lease term.

Under the new guidance, lessors account for leases using an approach that is substantially equivalent to previous guidance for sales-type leases, direct financing leases and operating leases. Our billboard lease revenues will continue to be recognized on a straight-line basis over their respective lease terms. Adoption of this guidance did not have a material effect on our consolidated financial statements.

Note 3. Restricted Cash

In the third quarter of 2018, we entered into an escrow agreement in connection with one of our transit franchise contracts, which requires us to deposit funds into an escrow account to fund capital expenditures over the term of the transit franchise contract. As of March 31, 2019, we have $1.4 million of restricted cash deposited in the escrow account.



	As of
(in millions)	March 31, 2019		March 31, 2018		December 31, 2018
Cash and cash equivalents	$	52.7	$	52.5	$	52.7
Restricted cash	1.4		—		1.4
Cash, cash equivalents and restricted cash	$	54.1	$	52.5	$	54.1

Note 4. Leases

Effective January 1, 2019, we adopted the FASB’s guidance addressing the recognition, measurement, presentation and disclosure of leases for both lessees and lessors using the transition method to adopt the new lease standard. See Note 2. New Accounting Standards: Adoption of New Accounting Standards.

Lessee

We generally lease the underlying sites upon which the physical billboard structures on which we display advertising copy for our customers are located. We also have leases for office and warehouse spaces. All leases are recorded on the Consolidated Statement of Financial Position and we recognize lease expense on a straight-line basis over the lease term. We do not separate lease and non-lease components from contracts.

Many of our leases include one or more options to renew, with renewal terms that can extend the lease term for varying lengths of time. These renewal provisions typically require consent of both parties. Many of our leases also contain termination provisions at our option, based on a variety of factors, including termination due to changing economic conditions of the related billboard location.

Certain of our lease agreements include rental payments based on a percentage of revenue over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

We rent or sublease certain real estate to third parties.

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

As of March 31, 2019, we have operating lease assets of $1.3 billion, short-term operating lease liabilities of $153.8 million and non-current operating lease liabilities of $1.2 billion.

For the three months ended March 31, 2019, we recorded operating lease costs of $94.4 million in Operating expenses and $2.1 million in Selling, general and administrative expenses. These costs include $19.5 million of variable operating lease costs. For the three months ended March 31, 2019, sublease income was immaterial.

As of March 31, 2019, minimum rental payments under operating leases are as follows:



(in millions)	Operating Leases
2019	$	167.9
2020	231.2
2021	214.8
2022	197.4
2023	175.5
2024 and thereafter	854.9
Total operating lease payments	1,841.7
Less: Interest	521.4
Present value of lease liabilities	$	1,320.3

As of December 31, 2018, minimum rental payments under non-cancellable operating leases with original terms in excess of one year are as follows:



(in millions)	Non-Cancellable Operating Leases
2019	$	154.8
2020	151.8
2021	139.1
2022	126.2
2023	109.8
2024 and thereafter	574.6
Total minimum payments	$	1,256.3

As of March 31, 2019, the weighted-average remaining lease term was 10.0 years and the weighted-average discount rate was 6.3%.

For the three months ended March 31, 2019, cash paid for operating leases was $94.2 million and leased assets obtained in exchange for new operating lease liabilities was $147.6 million.

Lessor

Our agreements with customers to advertise on our billboards are considered operating leases. Substantially all of our advertising structures (see Note 5. Property and Equipment) are utilized in the sale of advertising to customers, for which the contracts are accounted for as rental income. Billboard display revenues are recognized as rental income on a straight-line basis over the customer lease term. We exclude from rental income all taxes assessed by a governmental authority that we collect from customers. These operating leases are short-term in duration, typically a term of 4 weeks to one year. Our leases do not include any variable lease provisions or options to extend the lease. Certain contracts may include provisions for the early termination of the lease after an agreed upon notice period. We account for non-lease installation services and the lease associated with providing advertising space on our billboards as a combined component under the lease standard.

For the three months ended March 31, 2019, we recorded rental income of $242.0 million in Revenues on our Consolidated Statement of Operations.

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

As of March 31, 2019, rental payments to be received under non-cancellable operating leases are as follows:



(in millions)	Rental Income
2019	$	386.3
2020	39.4
2021	9.7
2022	2.6
2023	1.6
2024 and thereafter	0.9
Total minimum payments	$	440.5

Note 5. Property and Equipment

The table below presents the balances of major classes of assets and accumulated depreciation.



		As of
(in millions)	Estimated Useful Lives	March 31, 2019		December 31, 2018
Land		$	97.2	$	97.5
Buildings	20 to 40 years	49.4		48.7
Advertising structures	5 to 20 years	1,806.1		1,789.4
Furniture, equipment and other	3 to 10 years	136.8		134.3
Construction in progress		24.6		19.3
		2,114.1		2,089.2
Less: accumulated depreciation		1,459.4		1,436.3
Property and equipment, net		$	654.7	$	652.9

Depreciation expense was $21.1 million in each of the three months ended March 31, 2019 and 2018.

Note 6. Intangible Assets

Our identifiable intangible assets primarily consist of acquired permits and leasehold agreements, and franchise agreements, which grant us the right to operate out-of-home structures in specified locations and the right to provide advertising space on railroad and municipal transit properties. Identifiable intangible assets are amortized on a straight-line basis over their estimated useful life, which is the respective life of the agreement that in some cases includes historical experience of renewals.

Our identifiable intangible assets consist of the following:



(in millions)	Gross		Accumulated Amortization			Net
As of March 31, 2019:
Permits and leasehold agreements	$	1,110.2	$	(706.8	)	$	403.4
Franchise agreements	477.0		(360.4		)	116.6
Other intangible assets	47.0		(35.0		)	12.0
Total intangible assets	$	1,634.2	$	(1,102.2	)	$	532.0

As of December 31, 2018:
Permits and leasehold agreements	$	1,107.4	$	(697.6	)	$	409.8
Franchise agreements	470.7		(357.1		)	113.6
Other intangible assets	46.9		(33.1		)	13.8
Total intangible assets	$	1,625.0	$	(1,087.8	)	$	537.2

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

All of our intangible assets, except goodwill, are subject to amortization. Amortization expense was $24.7 million in the three months ended March 31, 2019, and $22.5 million in the three months ended March 31, 2018, which includes the amortization of direct lease acquisition costs of $10.3 million in the three months ended March 31, 2019, and $8.7 million in the three months ended March 31, 2018. Direct lease acquisition costs are amortized on a straight-line basis over the related customer lease term, which generally ranges from four weeks to one year.

Note 7. Asset Retirement Obligation

The following table sets forth the change in the asset retirement obligations associated with our advertising structures located on leased properties. The obligation is calculated based on the assumption that all of our advertising structures will be removed within the next 50 years. The estimated annual costs to dismantle and remove the structures upon the termination or non-renewal of our leases are consistent with our historical experience.



(in millions)
As of December 31, 2018	$	34.2
Accretion expense	0.6
Additions	0.1
Liabilities settled	(0.6		)
Foreign currency translation adjustments	0.1
As of March 31, 2019	$	34.4

Note 8. Related Party Transactions

We have a 50% ownership interest in two joint ventures that operate transit shelters in the greater Los Angeles area and Vancouver, and four joint ventures which currently operate a total of 11 billboard displays in New York and Boston. All of these joint ventures are accounted for as equity investments. These investments totaled $15.5 million as of March 31, 2019, and $16.1 million as of December 31, 2018, and are included in Other assets on the Consolidated Statements of Financial Position. We provided sales and management services to these joint ventures and recorded management fees in Revenues on the Consolidated Statement of Operations of $1.7 million in the three months ended March 31, 2019 and $1.6 million in the three months ended March 31, 2018.

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Notes to Consolidated Financial Statements

(Unaudited)

Note 9. Debt

Debt, net, consists of the following:



	As of
(in millions, except percentages)	March 31, 2019			December 31, 2018
Short-term debt:
AR Facility	$	80.0		$	85.0
Repurchase Facility	75.0			75.0
Total short-term debt	155.0			160.0

Long-term debt:
Revolving credit facility	35.0			—
Term loan, due 2024	668.2			668.1

Senior unsecured notes:
5.250% senior unsecured notes, due 2022	549.7			549.7
5.625% senior unsecured notes, due 2024	502.1			502.2
5.875% senior unsecured notes, due 2025	450.0			450.0
Total senior unsecured notes	1,501.8			1,501.9

Debt issuance costs	(19.3		)	(20.4		)
Total long-term debt, net	2,185.7			2,149.6

Total debt, net	$	2,340.7		$	2,309.6

Weighted average cost of debt	5.1		%	5.1		%

Term Loan

The interest rate on the term loan due in 2024 (the “Term Loan”) was 4.5% per annum as of March 31, 2019. As of March 31, 2019, a discount of $1.8 million on the Term Loan remains unamortized. The discount is being amortized through Interest expense, net, on the Consolidated Statement of Operations.

Revolving Credit Facility

We also have a $430.0 million revolving credit facility, which matures in 2022 (the “Revolving Credit Facility,” together with the Term Loan, the “Senior Credit Facilities”).

As of March 31, 2019, there were $35.0 million of outstanding borrowings under the Revolving Credit Facility, at a borrowing rate of approximately 4.5%.

The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $0.4 million in the three months ended March 31, 2019, and $0.3 million in the three months ended March 31, 2018. As of March 31, 2019, we had issued letters of credit totaling approximately $66.1 million against the letter of credit facility sublimit under the Revolving Credit Facility.

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Notes to Consolidated Financial Statements

(Unaudited)

Standalone Letter of Credit Facilities

As of March 31, 2019, we had issued letters of credit totaling approximately $143.0 million under our aggregate $150.0 million standalone letter of credit facilities. The total fees under the letter of credit facilities were immaterial in each of the three months ended March 31, 2019 and 2018.

Accounts Receivable Securitization Facilities

We have a $100.0 million revolving accounts receivable securitization facility (the “AR Facility”) which terminates in June 2021, unless extended, and a 364-day uncommitted $75.0 million structured repurchase facility (the “Repurchase Facility” and together with the AR Facility, the “AR Securitization Facilities”).

In connection with the AR Securitization Facilities, Outfront Media LLC, a wholly-owned subsidiary of the Company (the “Originator”), will sell and/or contribute its existing and future accounts receivable and certain related assets to Outfront Media Receivables LLC, a special purpose vehicle and wholly-owned subsidiary of the Company (the “SPV”). The SPV will transfer an undivided interest in the accounts receivable assets to certain purchasers from time to time (the “Purchasers”). The SPV is a separate legal entity with its own separate creditors who will be entitled to access the SPV’s assets before the assets become available to the Company. Accordingly, the SPV’s assets are not available to pay creditors of the Company or any of its subsidiaries, although collections from the receivables in excess of amounts required to repay the Purchasers and other creditors of the SPV may be remitted to the Company.

In connection with the Repurchase Facility, the Originator may borrow up to $75.0 million, collateralized by a subordinated note (the “Subordinated Note”) issued by the SPV in favor of the Originator and representing a portion of the outstanding balance of the accounts receivable assets sold by the Originator to the SPV under the AR Facility. The Subordinated Note will be transferred to MUFG, as repurchase buyer, on an uncommitted basis, and subject to repurchase by the Originator on termination of the Repurchase Facility. The Originator has granted MUFG a security interest in the Subordinated Note to secure its obligations under the agreements governing the Repurchase Facility, and the Company has agreed to guarantee the Originator’s obligations under the agreements governing the Repurchase Facility.

As of March 31, 2019, there were $80.0 million of outstanding borrowings under the AR Facility, at a borrowing rate of approximately 3.5%, and $75.0 million of outstanding borrowings under the Repurchase Facility, at a borrowing rate of approximately 3.7%. As of March 31, 2019, borrowing capacity remaining under the AR Facility was approximately $20.0 million based on approximately $192.4 million of accounts receivable used as collateral for the AR Securitization Facilities, and there was no borrowing capacity remaining under the Repurchase Facility, in accordance with the agreements governing the AR Securitization Facilities. The commitment fee based on the amount of unused commitments under the AR Facility was immaterial for each of the three months ended March 31, 2019 and 2018.

Senior Unsecured Notes

As of March 31, 2019, a discount of $0.3 million on $150.0 million aggregate principal amount of the 5.250% Senior Unsecured Notes due 2022, remains unamortized. The discount is being amortized through Interest expense, net, on the Consolidated Statement of Operations.

As of March 31, 2019, a premium of $2.1 million on $100.0 million aggregate principal amount of the 5.625% Senior Unsecured Notes due 2024, remains unamortized. The premium is being amortized through Interest expense, net, on the Consolidated Statement of Operations.

Debt Covenants

Our credit agreement, dated as of January 31, 2014 (as amended, supplemented or otherwise modified, the “Credit Agreement”), governing the Senior Credit Facilities, the agreements governing the AR Securitization Facilities, and the indentures governing our senior unsecured notes contain customary affirmative and negative covenants, subject to certain exceptions, including but not limited to those that limit the Company’s and our subsidiaries’ abilities to (i) pay dividends on, repurchase or make distributions in respect to the Company’s or its wholly-owned subsidiary, Outfront Media Capital LLC’s (“Finance LLC’s”) capital stock or make other restricted payments other than dividends or distributions necessary for us to

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Notes to Consolidated Financial Statements

(Unaudited)

maintain our REIT status, subject to certain conditions, and (ii) enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany or third-party transfers.

The terms of the Credit Agreement (and under certain circumstances, the agreements governing the AR Securitization Facilities) require that we maintain a Consolidated Net Secured Leverage Ratio, which is the ratio of (i) our consolidated secured debt (less up to $150.0 million of unrestricted cash) to (ii) our Consolidated EBITDA (as defined in the Credit Agreement) for the trailing four consecutive quarters, of no greater than 4.0 to 1.0. As of March 31, 2019, our Consolidated Net Secured Leverage Ratio was 1.5 to 1.0 in accordance with the Credit Agreement. The Credit Agreement also requires that, in connection with the incurrence of certain indebtedness, we satisfy a Consolidated Total Leverage Ratio, which is the ratio of our consolidated total debt to our Consolidated EBITDA for the trailing four consecutive quarters, of no greater than 6.0 to 1.0. As of March 31, 2019, our Consolidated Total Leverage Ratio was 4.6 to 1.0 in accordance with the Credit Agreement. As of March 31, 2019, we are in compliance with our debt covenants.

Deferred Financing Costs

As of March 31, 2019, we had deferred $22.8 million in fees and expenses associated with the Term Loan, Revolving Credit Facility, AR Securitization Facilities and our senior unsecured notes. We are amortizing the deferred fees through Interest expense, net, on our Consolidated Statement of Operations over the respective terms of the Term Loan, Revolving Credit Facility, AR Securitization Facilities and our senior unsecured notes.

Interest Rate Swap Agreements

As of March 31, 2019, under the terms of the agreements, we will pay interest based on an aggregate notional amount of $150.0 million, under a weighted-average fixed interest rate of 3.0%, with a receive rate of one-month LIBOR and maturing on December 29, 2021. The one-month LIBOR rate was approximately 2.5% as of March 31, 2019.

Fair Value

Under the fair value hierarchy, observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities are defined as Level 1; observable inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability are defined as Level 2; and unobservable inputs for the asset or liability are defined as Level 3. The aggregate fair value of our debt, which is estimated based on quoted market prices of similar liabilities, was approximately $2.4 billion as of March 31, 2019, and $2.3 billion as of December 31, 2018. The fair value of our debt as of both March 31, 2019, and December 31, 2018, is classified as Level 2. The aggregate fair value loss associated with our interest rate cash flow swap agreements was approximately $3.2 million as of March 31, 2019, and $2.4 million as of December 31, 2018. The aggregate fair value of our interest rate cash flow swap agreements as of both March 31, 2019 and December 31, 2018, is classified as Level 2.

Note 10. Equity

As of March 31, 2019, 450,000,000 shares of our common stock, par value $0.01 per share, were authorized; 141,634,024 shares were issued and outstanding; and 50,000,000 shares of our preferred stock, par value $0.01 per share, were authorized with no shares issued and outstanding.

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Notes to Consolidated Financial Statements

(Unaudited)

In June 2017, certain subsidiaries of OUTFRONT Media Inc. acquired the equity interests of certain subsidiaries of All Vision LLC (“All Vision”), which hold substantially all of All Vision’s outdoor advertising assets in Canada, and effectuated an amalgamation of All Vision’s Canadian business with our Canadian business (the “Transaction”). In connection with the Transaction, the Company issued 1,953,407 shares of Class A equity interests of a subsidiary of the Company that controls its Canadian business (“Outfront Canada”). The Class A equity interests are entitled to receive priority cash distributions from Outfront Canada at the same time and in the same per share amount as the dividends paid on shares of the Company’s common stock. The Class A equity interests may be redeemed by the holders in exchange for shares of the Company’s common stock on a one-for-one basis (subject to anti-dilution adjustments) or, at the Company’s option, cash equal to the then fair market value of the shares of the Company’s common stock. In connection with the Transaction, the Company has agreed to limitations on its ability to sell or otherwise dispose of the assets acquired from All Vision for a period of five years, unless it pays holders of the Class A equity interests in Outfront Canada an amount intended to approximate their resulting tax liability.

During the three months ended March 31, 2019, we made distributions of $0.6 million to holders of the Class A equity interests, which are recorded in Dividends on our Consolidated Statements of Equity and Consolidated Statements of Cash Flows. As of March 31, 2019, 330,151 Class A equity interests have been redeemed for shares of the Company’s common stock.

In the three months ended March 31, 2019, we issued 5,512 shares of our common stock under the OUTFRONT Media Inc. Amended and Restated Omnibus Stock Incentive Plan, valued at $0.1 million, to a consultant for services rendered.

We have a sales agreement in connection with an “at-the-market” equity offering program (the “ATM Program”), under which we may, from time to time, issue and sell shares of our common stock up to an aggregate offering price of $300.0 million. We have no obligation to sell any of our common stock under the sales agreement and may at any time suspend solicitations and offers under the sales agreement. During the three months ended March 31, 2019, 750,000 shares of our common stock were sold under the ATM Program for gross proceeds of $17.0 million with commissions of $0.3 million, for total net proceeds of $16.7 million. As of March 31, 2019, we had approximately $267.5 million of capacity remaining under the ATM Program.

On April 26, 2019, we announced that our board of directors approved a quarterly cash dividend of $0.36 per share on our common stock, payable on June 28, 2019, to stockholders of record at the close of business on June 7, 2019.

Note 11. Revenues

The following table summarizes revenues by source:



	Three Months Ended
	March 31,
(in millions)	2019		2018
Billboard:
Static displays	$	194.3	$	189.5
Digital displays	47.0		41.9
Other	9.7		7.9
Billboard revenues	251.0		239.3
Transit:
Static displays	79.0		67.8
Digital displays	16.6		10.7
Other	8.8		7.3
Total transit revenues	104.4		85.8
Sports marketing and other	16.3		12.8
Transit and other revenues	120.7		98.6
Total revenues	$	371.7	$	337.9

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Notes to Consolidated Financial Statements

(Unaudited)

Rental income was $242.0 million in the three months ended March 31, 2019, and $231.9 million in the three months ended March 31, 2018, and is recorded in Billboard revenues on the Consolidated Statement of Operations.

The following table summarizes revenues by geography:



	Three Months Ended
	March 31,
(in millions)	2019		2018
United States:
Billboard	$	236.2	$	226.3
Transit and other	102.2		83.6
Sports marketing and other	16.3		12.8
Total United States revenues	354.7		322.7
Canada	17.0		15.2
Total revenues	$	371.7	$	337.9

We recognized substantially all of the Deferred revenues on the Consolidated Statement of Financial Position as of December 31, 2018, during the three months ended March 31, 2019.

Note 12. Restructuring Charges

For the three months ended March 31, 2019, we recorded restructuring charges of $0.3 million associated with the elimination of a corporate management position. For the three months ended March 31, 2018, we recorded restructuring charges of $1.1 million, of which $0.6 million was recorded in Other for severance charges primarily associated with the reorganization of our Sports Marketing operating segment and $0.5 million was recorded in our U.S. Media segment for severance charges associated with the reorganization of various departments. As of March 31, 2019, $1.2 million in restructuring reserves remain outstanding and is included in Other current liabilities on the Consolidated Statement of Financial Position.

Note 13. Acquisitions

We completed several asset acquisitions for a total purchase price of approximately $2.5 million in the three months ended March 31, 2019, and $4.1 million in the three months ended March 31, 2018.

In the first quarter of 2019, we entered into an agreement to acquire four digital billboard displays in Atlanta, Georgia, for an aggregate purchase price of $24.0 million. In connection with the execution of the agreement, we paid a deposit of $5.0 million to an escrow agent, which is included in Other assets on our Consolidated Statement of Financial Position. The transaction is expected to close in 2019, subject to customary closing conditions.

In the second quarter of 2018, we entered into an agreement to acquire 14 digital and 7 static billboard displays in California for a total estimated purchase price of $35.4 million, subject to post-closing adjustments for the achievement of operating income before depreciation and amortization targets relating to the acquired displays. The transaction is expected to close in 2019, subject to customary closing conditions and the timing of site development.

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Notes to Consolidated Financial Statements

(Unaudited)

Note 14. Stock-Based Compensation

The following table summarizes our stock-based compensation expense for the three months ended March 31, 2019 and 2018.



	Three Months Ended
	March 31,
(in millions)	2019			2018
Stock-based compensation expenses (restricted share units (“RSUs”) and performance-based RSUs (“PRSUs”)), before income taxes	$	5.3		$	5.0
Tax benefit	(0.3		)	(0.3		)
Stock-based compensation expense, net of tax	$	5.0		$	4.7

As of March 31, 2019, total unrecognized compensation cost related to non-vested RSUs and PRSUs was $39.8 million, which is expected to be recognized over a weighted average period of 2.4 years.

RSUs and PRSUs

The following table summarizes activity for the three months ended March 31, 2019, of RSUs and PRSUs issued to our employees.



	Activity		Weighted Average Per Share Grant Date Fair Market Value
Non-vested as of December 31, 2018	1,723,980		$	22.39
Granted:
RSUs	797,745		21.41
PRSUs	376,418		21.41
Vested:
RSUs	(542,935	)	22.14
PRSUs	(246,542	)	21.99
Forfeitures:
RSUs	(18,215	)	22.45
PRSUs	(5,250	)	22.17
Non-vested as of March 31, 2019	2,085,201		21.95

Stock Options

The following table summarizes activity for the three months ended March 31, 2019, of stock options issued to our employees.



	Activity		Weighted Average Exercise Price
Outstanding as of December 31, 2018	141,847		$	23.08
Exercised	(15,319	)	10.78
Outstanding as of March 31, 2019	126,528		24.57

Exercisable as of March 31, 2019	126,528		24.57

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Notes to Consolidated Financial Statements

(Unaudited)

Note 15. Retirement Benefits

The following table presents the components of net periodic pension cost and amounts recognized in other comprehensive income (loss) for our pension plans:



	Three Months Ended
	March 31,
(in millions)	2019			2018
Components of net periodic pension cost:
Service cost	$	0.5		$	0.4
Interest cost	0.5			0.5
Expected return on plan assets	(0.7		)	(0.6		)
Amortization of net actuarial losses^(a)	0.2			0.1
Net periodic pension cost	$	0.5		$	0.4


(a)	Reflects amounts reclassified from accumulated other comprehensive income to net income.

In the three months ended March 31, 2019, we contributed $0.1 million to our pension plans. In 2019, we expect to contribute approximately $1.6 million to our pension plans.

Note 16. Income Taxes

We are organized in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”) and, accordingly, we have not provided for U.S. federal income tax on our REIT taxable income that we distribute to our stockholders. We have elected to treat our subsidiaries that participate in certain non-REIT qualifying activities, and our foreign subsidiaries, as taxable REIT subsidiaries (“TRSs”). As such, we have provided for their federal, state and foreign income taxes.

Tax years 2015 to present are open for examination by the tax authorities. We are currently under examination by the Internal Revenue Service for the 2016 tax year and by New York State for the 2014 tax year.

Our effective income tax rate represents a combined annual effective tax rate for federal, state, local and foreign taxes applied to interim operating results.

In the three months ended March 31, 2019 and 2018, our effective tax rate differed from the U.S. federal statutory income tax rate primarily due to our REIT status, including the dividends paid deduction, the impact of state and local taxes, and the effect of foreign operations.

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Notes to Consolidated Financial Statements

(Unaudited)

Note 17. Earnings Per Share (“EPS”)



	Three Months Ended
	March 31,
(in millions)	2019		2018
Net income available for common stockholders, diluted	$	6.1	$	9.1
Less: Distributions to holders of Class A equity interests of a subsidiary	0.6		0.7
Net income available for common stockholders, basic	$	5.5	$	8.4

Weighted average shares for basic EPS	140.7		138.8
Dilutive potential shares from grants of RSUs, PRSUs and stock options^(a)	0.4		0.3
Weighted average shares for diluted EPS	141.1		139.1


(a)	The potential impact of an aggregate 0.1 million granted RSUs, PRSUs and stock options in the three months ended March 31, 2019, and 0.8 million in the three months ended March 31, 2018, were antidilutive.


(b)	The potential impact of 1.7 million shares of Class A equity interests of Outfront Canada in the three months ended March 31, 2019, and 2.0 million in the three months ended March 31, 2018, was antidilutive. (See Note 10. Equity to the Consolidated Financial Statements.)

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Notes to Consolidated Financial Statements

(Unaudited)

Note 18. Commitments and Contingencies

Off-Balance Sheet Arrangements

Our off-balance sheet commitments primarily consist of guaranteed minimum annual payments. These arrangements result from our normal course of business and represent obligations that are payable over several years.

Contractual Obligations

We have agreements with municipalities and transit operators which entitle us to operate advertising displays within their transit systems, including on the interior and exterior of rail and subway cars and buses, as well as on benches, transit shelters, street kiosks, and transit platforms. Under most of these franchise agreements, the franchisor is entitled to receive the greater of a percentage of the relevant revenues, net of agency fees, or a specified guaranteed minimum annual payment.

We also have marketing and multimedia rights agreements with colleges, universities and other educational institutions, which entitle us to operate on-campus advertising displays, as well as manage marketing opportunities, media rights and experiential entertainment at sports events. Under most of these agreements, the school is entitled to receive the greater of a percentage of the relevant revenue, net of agency commissions, or a specified guaranteed minimum annual payment.

Under the New York Metropolitan Transportation Authority (“the “MTA”) agreement, we are obligated to deploy, over a number of years, (i) 8,565 digital advertising screens on subway and train platforms and entrances, (ii) 37,716 smaller-format digital advertising screens on rolling stock, and (iii) 7,829 MTA communications displays. In addition, we are obligated to pay to the MTA the greater of a percentage of revenues or a guaranteed minimum annual payment. Incremental revenues that exceed an annual base revenue amount will be retained by us for the cost of deploying advertising and communications displays throughout the transit system. As presented in the table below, MTA equipment deployment costs are being recorded as Prepaid MTA equipment deployment costs and Intangible assets on our Consolidated Statement of Financial Position, and as these costs are recouped from incremental revenues that the MTA would otherwise be entitled to receive, Prepaid MTA equipment deployment costs will be reduced. If incremental revenues generated over the term of the agreement are not sufficient to cover all or a portion of the equipment deployment costs, the costs will not be recouped, which could have an adverse effect on our business, financial condition and results of operation. As of March 31, 2019, 1,964 digital displays had been installed, of which 735 installations occurred in the three months ended March 31, 2019. For the full year of 2019, we expect our MTA equipment deployment costs to be approximately $175.0 million.



(in millions)	Beginning Balance		Deployment Costs Incurred		Recoupment			Amortization			Ending Balance
Three months ended March 31, 2019:
Prepaid MTA equipment deployment costs	$	79.5	$	27.1	$	(4.4	)	$	—		$	102.2
Intangible assets (franchise agreements)	14.8		5.8		—			(0.5		)	20.1
Total	$	94.3	$	32.9	$	(4.4	)	$	(0.5	)	$	122.3

Year ended December 31, 2018:
Prepaid MTA equipment deployment costs	$	4.7	$	76.5	$	(1.7	)	$	—		$	79.5
Intangible assets (franchise agreements)	0.9		14.7		—			(0.8		)	14.8
Total	$	5.6	$	91.2	$	(1.7	)	$	(0.8	)	$	94.3

Letters of Credit

We have indemnification obligations with respect to letters of credit and surety bonds primarily used as security against non-performance in the normal course of business. As of March 31, 2019, the outstanding letters of credit were approximately $209.1 million and outstanding surety bonds were approximately $26.6 million, and were not recorded on the Consolidated Statements of Financial Position.

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Notes to Consolidated Financial Statements

(Unaudited)

Legal Matters

On an ongoing basis, we are engaged in lawsuits and governmental proceedings and respond to various investigations, inquiries, notices and claims from national, state and local governmental and other authorities (collectively, “litigation”). Litigation is inherently uncertain and always difficult to predict. Although it is not possible to predict with certainty the eventual outcome of any litigation, in our opinion, none of our current litigation is expected to have a material adverse effect on our results of operations, financial position or cash flows.

Note 19. Segment Information

We manage our operations through three operating segments—(1) U.S. Billboard and Transit, which is included in our U.S. Media reportable segment, (2) International and (3) Sports Marketing. International and Sports Marketing do not meet the criteria to be a reportable segment and accordingly, are both included in Other.

The following tables set forth our financial performance by segment.



	Three Months Ended
	March 31,
(in millions)	2019		2018
Revenues:
U.S. Media	$	338.4	$	309.9
Other	33.3		28.0
Total revenues	$	371.7	$	337.9

We present Operating income before Depreciation, Amortization, Net gain (loss) on dispositions, Stock-based compensation and Restructuring charges (“Adjusted OIBDA”) as the primary measure of profit and loss for our operating segments.



	Three Months Ended
	March 31,
(in millions)	2019			2018
Net income	$	6.1		$	9.1
Benefit for income taxes	(1.0		)	(6.7		)
Equity in earnings of investee companies, net of tax	(0.8		)	(0.8		)
Interest expense, net	32.7			30.0
Other (income) expense, net	(0.1		)	0.1
Operating income	36.9			31.7
Restructuring charges	0.3			1.1
Net gain on dispositions	(1.5		)	(0.2		)
Depreciation and amortization	45.8			43.6
Stock-based compensation	5.3			5.0
Total Adjusted OIBDA	$	86.8		$	81.2

Adjusted OIBDA:
U.S. Media	$	94.6		$	88.9
Other	1.2			(0.8		)
Corporate	(9.0		)	(6.9		)
Total Adjusted OIBDA	$	86.8		$	81.2

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Notes to Consolidated Financial Statements

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
Operating income (loss):
U.S. Media	$	55.5		$	50.6
Other	(4.0		)	(7.0		)
Corporate	(14.6		)	(11.9		)
Total operating income	$	36.9		$	31.7

Net gain on dispositions:
U.S. Media	$	(1.5	)	$	(0.2	)
Total gain on dispositions	$	(1.5	)	$	(0.2	)

Depreciation and amortization:
U.S. Media	$	40.6		$	38.0
Other	5.2			5.6
Total depreciation and amortization	$	45.8		$	43.6

Capital expenditures:
U.S. Media	$	17.3		$	14.4
Other	0.8			2.4
Total capital expenditures	$	18.1		$	16.8



	As of
(in millions)	March 31, 2019		December 31, 2018
Assets:
U.S. Media	$	4,775.2	$	3,610.0
Other	282.6		202.5
Corporate	19.2		16.2
Total assets	$	5,077.0	$	3,828.7

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Notes to Consolidated Financial Statements

(Unaudited)

Note 20. Condensed Consolidating Financial Information

We and our material existing and future direct and indirect 100% owned domestic subsidiaries (except Finance LLC and Outfront Media Capital Corporation, the borrowers under the Term Loan and the Revolving Credit Facility) guarantee the obligations under the Term Loan and the Revolving Credit Facility. Our senior unsecured notes are fully and unconditionally, and jointly and severally guaranteed on a senior unsecured basis by us and each of our direct and indirect wholly-owned domestic subsidiaries that guarantees the Term Loan and the Revolving Credit Facility (see Note 8. Debt to the Consolidated Financial Statements). The following condensed consolidating schedules present financial information on a combined basis in conformity with the SEC’s Regulation S-X, Rule 3-10 for: (i) OUTFRONT Media Inc. (the “Parent Company”); (ii) Finance LLC (the “Subsidiary Issuer”); (iii) the guarantor subsidiaries; (iv) the non-guarantor subsidiaries, including the SPV;

(v) elimination entries necessary to consolidate the Parent Company and the Subsidiary Issuer, the guarantor subsidiaries and non-guarantor subsidiaries; and (vi) the Parent Company on a consolidated basis. Outfront Media Capital Corporation is a co-issuer finance subsidiary with no assets or liabilities, and therefore has not been included in the tables below.



	As of March 31, 2019
(in millions)	Parent Company		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Current assets:
Cash and cash equivalents	$	—	$	11.4	$	—	$	41.3	$	—		$	52.7
Receivables, less allowance	—		—		46.3		205.4		(22.6		)	229.1
Other current assets	—		1.3		137.0		105.8		(174.2		)	69.9
Total current assets	—		12.7		183.3		352.5		(196.8		)	351.7
Property and equipment, net	—		—		606.0		48.7		—			654.7
Goodwill	—		—		2,059.9		20.8		—			2,080.7
Intangible assets	—		—		473.7		58.3		—			532.0
Operating lease assets	—		—		1,233.2		94.6		—			1,327.8
Investment in subsidiaries	1,051.3		3,250.6		268.2		—		(4,570.1		)	—
Prepaid MTA equipment deployment costs	—		—		71.1		—		—			71.1
Other assets	—		2.0		53.7		3.3		—			59.0
Intercompany	—		—		81.0		97.9		(178.9		)	—
Total assets	$	1,051.3	$	3,265.3	$	5,030.1	$	676.1	$	(4,945.8	)	$	5,077.0

Total current liabilities	$	—	$	25.1	$	527.2	$	183.0	$	(196.8	)	$	538.5
Long-term debt, net	—		2,185.7		—		—		—			2,185.7
Deferred income tax liabilities, net	—		—		—		17.5		—			17.5
Operating lease liability	—		—		1,087.0		79.5		—			1,166.5
Asset retirement obligation	—		—		30.1		4.3		—			34.4
Deficit in excess of investment of subsidiaries	—		—		2,199.3		—		(2,199.3		)	—
Other liabilities	—		3.2		37.3		2.0		—			42.5
Intercompany	—		—		97.9		81.0		(178.9		)	—
Total liabilities	—		2,214.0		3,978.8		367.3		(2,575.0		)	3,985.1
Total stockholders’ equity	1,051.3		1,051.3		1,051.3		268.2		(2,370.8		)	1,051.3
Non-controlling interests	—		—		—		40.6		—			40.6
Total equity	1,051.3		1,051.3		1,051.3		308.8		(2,370.8		)	1,091.9
Total liabilities and equity	$	1,051.3	$	3,265.3	$	5,030.1	$	676.1	$	(4,945.8	)	$	5,077.0

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)



	As of December 31, 2018
(in millions)	Parent Company		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Current assets:
Cash and cash equivalents	$	—	$	12.0	$	—	$	40.7	$	—		$	52.7
Receivables, less allowance	—		—		52.7		232.1		(19.9		)	264.9
Other current assets	—		1.0		176.3		81.5		(146.9		)	111.9
Total current assets	—		13.0		229.0		354.3		(166.8		)	429.5
Property and equipment, net	—		—		604.3		48.6		—			652.9
Goodwill	—		—		2,059.9		19.8		—			2,079.7
Intangible assets	—		—		478.4		58.8		—			537.2
Investment in subsidiaries	1,102.8		3,257.5		261.9		—		(4,622.2		)	—
Prepaid MTA equipment deployment costs	—		—		60.6		—		—			60.6
Other assets	—		2.3		63.4		3.1		—			68.8
Intercompany	—		—		81.0		100.7		(181.7		)	—
Total assets	$	1,102.8	$	3,272.8	$	3,838.5	$	585.3	$	(4,970.7	)	$	3,828.7

Total current liabilities	$	—	$	18.0	$	375.5	$	175.9	$	(166.8	)	$	402.6
Long-term debt, net	—		2,149.6		—		—		—			2,149.6
Deferred income tax liabilities, net	—		—		—		17.0		—			17.0
Asset retirement obligation	—		—		29.9		4.3		—			34.2
Deficit in excess of investment of subsidiaries	—		—		2,154.7		—		(2,154.7		)	—
Other liabilities	—		2.4		74.9		2.7		—			80.0
Intercompany	—		—		100.7		81.0		(181.7		)	—
Total liabilities	—		2,170.0		2,735.7		280.9		(2,503.2		)	2,683.4
Total stockholders’ equity	1,102.8		1,102.8		1,102.8		261.9		(2,467.5		)	1,102.8
Non-controlling interests	—		—		—		42.5		—			42.5
Total equity	1,102.8		1,102.8		1,102.8		304.4		(2,467.5		)	1,145.3
Total liabilities and equity	$	1,102.8	$	3,272.8	$	3,838.5	$	585.3	$	(4,970.7	)	$	3,828.7

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)



	Three Months Ended March 31, 2019
(in millions)	Parent Company			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues:
Billboard	$	—		$	—		$	236.0		$	15.0		$	—		$	251.0
Transit and other	—			—			118.4			2.3			—			120.7
Total revenues	—			—			354.4			17.3			—			371.7
Expenses:
Operating	—			—			204.9			12.0			—			216.9
Selling, general and administrative	0.4			0.1			69.9			2.9			—			73.3
Restructuring charges	—			—			0.3			—			—			0.3
Net gain on dispositions	—			—			(1.5		)	—			—			(1.5		)
Depreciation	—			—			18.4			2.7			—			21.1
Amortization	—			—			22.6			2.1			—			24.7
Total expenses	0.4			0.1			314.6			19.7			—			334.8
Operating income (loss)	(0.4		)	(0.1		)	39.8			(2.4		)	—			36.9
Interest expense, net	—			(30.3		)	(1.0		)	(1.4		)	—			(32.7		)
Other income, net	—			—			—			0.1			—			0.1
Income (loss) before benefit (provision) for income taxes and equity in earnings of investee companies	(0.4		)	(30.4		)	38.8			(3.7		)	—			4.3
Benefit (provision) for income taxes	—			—			(0.2		)	1.2			—			1.0
Equity in earnings of investee companies, net of tax	6.5			36.9			(32.1		)	0.2			(10.7		)	0.8
Net income (loss)	$	6.1		$	6.5		$	6.5		$	(2.3	)	$	(10.7	)	$	6.1

Net income (loss)	$	6.1		$	6.5		$	6.5		$	(2.3	)	$	(10.7	)	$	6.1
Total other comprehensive income, net of tax	1.8			1.8			1.8			2.6			(6.2		)	1.8
Total comprehensive income	$	7.9		$	8.3		$	8.3		$	0.3		$	(16.9	)	$	7.9

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)



	Three Months Ended March 31, 2018
(in millions)	Parent Company			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues:
Billboard	$	—		$	—		$	226.2		$	13.1		$	—		$	239.3
Transit and other	—			—			96.4			2.2			—			98.6
Total revenues	—			—			322.6			15.3			—			337.9
Expenses:
Operating	—			—			184.2			12.9			—			197.1
Selling, general and administrative	0.4			0.1			62.9			1.2			—			64.6
Restructuring charges	—			—			1.1			—			—			1.1
Net gain on dispositions	—			—			(0.2		)	—			—			(0.2		)
Depreciation	—			—			17.7			3.4			—			21.1
Amortization	—			—			20.7			1.8			—			22.5
Total expenses	0.4			0.1			286.4			19.3			—			306.2
Operating income (loss)	(0.4		)	(0.1		)	36.2			(4.0		)	—			31.7
Interest expense, net	—			(28.6		)	(0.9		)	(0.5		)	—			(30.0		)
Other expense, net	—			—			—			(0.1		)	—			(0.1		)
Income (loss) before benefit for income taxes and equity in earnings of investee companies	(0.4		)	(28.7		)	35.3			(4.6		)	—			1.6
Benefit for income taxes	—			—			1.3			5.4			—			6.7
Equity in earnings of investee companies, net of tax	9.5			38.2			(27.1		)	0.1			(19.9		)	0.8
Net income	$	9.1		$	9.5		$	9.5		$	0.9		$	(19.9	)	$	9.1

Net income	$	9.1		$	9.5		$	9.5		$	0.9		$	(19.9	)	$	9.1
Total other comprehensive loss, net of tax	(5.1		)	(5.1		)	(5.1		)	(5.1		)	15.3			(5.1		)
Total comprehensive income (loss)	$	4.0		$	4.4		$	4.4		$	(4.2	)	$	(4.6	)	$	4.0

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)



	Three Months Ended March 31, 2019
(in millions)	Parent Company			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net cash flow provided by (used for) operating activities	$	(0.4	)	$	(21.8	)	$	62.4		$	1.2		$	—	$	41.4
Investing activities:
Capital expenditures	—			—			(15.5		)	(2.6		)	—		(18.1		)
Acquisitions	—			—			(7.5		)	—			—		(7.5		)
MTA franchise rights	—			—			(5.4		)	—			—		(5.4		)
Net proceeds from dispositions	—			—			2.2			—			—		2.2
Return of investment in investee companies	—			—			0.1			—			—		0.1
Net cash flow used for investing activities	—			—			(26.1		)	(2.6		)	—		(28.7		)
Financing activities:
Proceeds from long-term debt borrowings	—			35.0			—			—			—		35.0
Proceeds from borrowings under short-term debt facilities	—			—			—			15.0			—		15.0
Repayments of borrowings under short-term debt facilities	—			—			—			(20.0		)	—		(20.0		)
Proceeds from shares issued under the ATM Program	16.6			—			—			—			—		16.6
Taxes withheld for stock-based compensation	—			—			(7.6		)	—			—		(7.6		)
Dividends	(51.2		)	—			—			(0.6		)	—		(51.8		)
Intercompany	35.0			(13.8		)	(28.7		)	7.5			—		—
Net cash flow provided by (used for) financing activities	0.4			21.2			(36.3		)	1.9			—		(12.8		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			—			0.1			—		0.1
Net increase (decrease) in cash, cash equivalents and restricted cash	—			(0.6		)	—			0.6			—		—
Cash, cash equivalents and restricted cash at beginning of period	—			12.0			1.4			40.7			—		54.1
Cash, cash equivalents and restricted cash at end of period	$	—		$	11.4		$	1.4		$	41.3		$	—	$	54.1

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)



	Three Months Ended March 31, 2018
(in millions)	Parent Company			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net cash flow provided by (used for) operating activities	$	(0.4	)	$	(19.5	)	$	81.8		$	0.2		$	—	$	62.1
Investing activities:
Capital expenditures	—			—			(14.5		)	(2.3		)	—		(16.8		)
Acquisitions	—			—			(4.1		)	—			—		(4.1		)
MTA franchise rights	—			—			(1.4		)	—			—		(1.4		)
Net proceeds from dispositions	—			—			0.2			—			—		0.2
Net cash flow used for investing activities	—			—			(19.8		)	(2.3		)	—		(22.1		)
Financing activities:
Proceeds from long-term debt borrowings	—			10.0			—			—			—		10.0
Proceeds from borrowings under short-term debt facilities	—			—			—			57.0			—		57.0
Repayments of borrowings under short-term debt facilities	—			—			—			(45.0		)	—		(45.0		)
Taxes withheld for stock-based compensation	—			—			(6.5		)	—			—		(6.5		)
Dividends	(50.4		)	—			—			(0.7		)	—		(51.1		)
Intercompany	50.8			17.8			(57.2		)	(11.4		)	—		—
Net cash flow provided by (used for) financing activities	0.4			27.8			(63.7		)	(0.1		)	—		(35.6		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			—			(0.2		)	—		(0.2		)
Net increase (decrease) in cash, cash equivalents and restricted cash	—			8.3			(1.7		)	(2.4		)	—		4.2
Cash, cash equivalents and restricted cash at beginning of period	—			10.2			3.7			34.4			—		48.3
Cash, cash equivalents and restricted cash at end of period	$	—		$	18.5		$	2.0		$	32.0		$	—	$	52.5

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our historical consolidated financial statements and the notes thereto appearing in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2019, and the unaudited consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q. This MD&A contains forward-looking statements that involve numerous risks and uncertainties. The forward-looking statements are subject to a number of important factors, including, but not limited to, those factors discussed in the sections entitled “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 27, 2019, and the section entitled “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q, that could cause our actual results to differ materially from the results described herein or implied by such forward-looking statements. Except as otherwise indicated or unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to (i) “OUTFRONT Media,” “the Company,” “we,” “our,” “us” and “our company” mean OUTFRONT Media Inc., a Maryland corporation, and unless the context requires otherwise, its consolidated subsidiaries, and (ii) the “25 largest markets in the U.S.,” “140 markets in the U.S. and Canada” and “Nielsen Designated Market Areas” are based, in whole or in part, on Nielsen Media Research’s Designated Market Area rankings as of January 1, 2019.

Overview

OUTFRONT Media is a real estate investment trust (“REIT”), which provides advertising space (“displays”) on out-of-home advertising structures and sites in the United States (the “U.S.”) and Canada. We manage our operations through three operating segments—(1) U.S. Billboard and Transit, which is included in our U.S. Media reportable segment, (2) International and (3) Sports Marketing. International and Sports Marketing do not meet the criteria to be a reportable segment and accordingly, are both included in Other (see Note 19. Segment Information to the Consolidated Financial Statements).

Business

We are one of the largest providers of advertising space on out-of-home advertising structures and sites across the U.S. and Canada. Our inventory consists of billboard displays, which are primarily located on the most heavily traveled highways and roadways in top Nielsen Designated Market Areas (“DMAs”), and transit advertising displays operated under exclusive multi-year contracts with municipalities in large cities across the U.S. and Canada. We also have marketing and multimedia rights agreements with colleges, universities and other educational institutions, which entitle us to operate on-campus advertising displays, as well as manage marketing opportunities, media rights and experiential entertainment at sports events. In total, we have displays in all of the 25 largest markets in the U.S. and approximately 140 markets in the U.S. and Canada. Our top market, high profile location focused portfolio includes sites such as the Bay Bridge in San Francisco, various locations along Sunset Boulevard in Los Angeles, and sites in and around both Grand Central Station and Times Square in New York. The breadth and depth of our portfolio provides our customers with a range of options to address their marketing objectives, from national, brand-building campaigns to hyper-local campaigns that drive customers to the advertiser’s website or retail location “one mile down the road.”

In addition to providing location-based displays, we also focus on delivering audiences to our customers. Using Geopath, the out-of-home advertising industry’s audience measurement system, we provide advertisers with the size and demographic composition of the audience that is exposed to individual displays or a complete campaign. As part of our ON Smart Media platform, we are developing hardware and software solutions for enhanced demographic and location targeting, and engaging ways to connect with consumers on-the-go. Additionally, our OUTFRONT Mobile Network allows our customers to further leverage location targeting with interactive mobile advertising that uses geofence technology and other data to push mobile ads to consumers within a pre-defined radius around a corresponding billboard display or other designated advertising location. Further, our social influencer add-on product allows our customers to leverage location targeting with social sharing amplification.

We believe out-of-home advertising continues to be an attractive form of advertising, as our displays are always viewable and cannot be turned off, skipped, blocked or fast-forwarded. Further, out-of-home advertising can be an effective “stand-alone” medium, as well as an integral part of a campaign to reach audiences using multiple forms of media, including television, radio, print, online, mobile and social media advertising platforms. We provide our customers with a differentiated advertising solution at an attractive price point relative to other forms of advertising. In addition to leasing displays, we provide other value-added services to our customers, such as pre-campaign category research, attribution, consumer insights, creative design

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support through OUTFRONT Studios, print production and post-campaign tracking and analytics, as well as use of a real-time mobile operations reporting system that facilitates proof of performance to customers for substantially all of our business.

U.S. Media. Our U.S. Media segment generated 23% of its revenues in the New York City metropolitan area in the three months ended March 31, 2019 and 22% in the three months ended March 31, 2018, and generated 16% in the Los Angeles metropolitan area in each of the three months ended March 31, 2019 and 2018. In the three months ended March 31, 2019, our U.S. Media segment generated $338.4 million of Revenues and $94.6 million of Operating income before Depreciation, Amortization, Net (gain) loss on dispositions, Stock-based compensation and Restructuring charges (“Adjusted OIBDA”). In the three months ended March 31, 2018, our U.S. Media segment generated $309.9 million of Revenues and $88.9 million of Adjusted OIBDA. (See the “Segment Results of Operations” section of this MD&A.)

Other (includes International and Sports Marketing). In the three months ended March 31, 2019, Other generated $33.3 million of Revenues and $1.2 million of Adjusted OIBDA. In the three months ended March 31, 2018, Other generated $28.0 million of Revenues and an Adjusted OIBDA loss of $0.8 million.

Economic Environment

Our revenues and operating results are sensitive to fluctuations in advertising expenditures, general economic conditions and other external events beyond our control.

Business Environment

The outdoor advertising industry is fragmented, consisting of several companies operating on a national basis, as well as hundreds of smaller regional and local companies operating a limited number of displays in a single or a few local geographic markets. We compete with these companies for both customers and structure and display locations. We also compete with other media, including online, mobile and social media advertising platforms and traditional advertising platforms (such as television, radio, print and direct mail marketers). In addition, we compete with a wide variety of out-of-home media, including advertising in shopping centers, airports, movie theaters supermarkets and taxis.

Increasing the number of digital displays in our prime audience locations is an important element of our organic growth strategy, as digital displays have the potential to attract additional business from both new and existing customers. We believe digital displays are attractive to our customers because they allow for the development of richer and more visually engaging messages, provide our customers with the flexibility both to target audiences by time of day and to quickly launch new advertising campaigns, and eliminate or greatly reduce print production and installation costs. In addition, digital displays enable us to run multiple advertisements on each display. Digital billboard displays generate approximately four times more revenue per display on average than traditional static billboard displays. Digital billboard displays also incur, on average, approximately two to four times more costs, including higher variable costs associated with the increase in revenue than traditional static billboard displays. As a result, digital billboard displays generate higher profits and cash flows than traditional static billboard displays. The majority of our digital billboard displays were converted from traditional static billboard displays.

In 2017, we commenced deployment of state-of-the-art digital transit displays in connection with several transit franchises and are planning to increase deployments significantly over the coming years. Once the digital transit displays have been deployed at scale, we expect that revenue generated on digital transit displays will be a multiple of the revenue generated on comparable static transit displays. We intend to incur significant equipment deployment costs and capital expenditures in the coming years to continue increasing the number of digital displays in our portfolio.

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We have built or converted 23 new digital billboard displays in the United States and one in Canada during the three months ended March 31, 2019. Additionally, in the three months ended March 31, 2019, we entered into marketing arrangements to sell advertising on 16 third-party digital billboard displays in the U.S. and five third-party digital billboard displays in Canada. In the three months ended March 31, 2019, we have built, converted or replaced 746 digital transit and other displays in the United States. The following table sets forth information regarding our digital displays.



	Digital Revenues (in millions) for the Three Months Ended March 31, 2019^(a)						Number of Digital Displays as of March 31, 2019^(a)
Location	Digital Billboard		Digital Transit and Other		Total Digital Revenues		Digital Billboard Displays	Digital Transit and Other Displays	Total Digital Displays
United States	$	41.8	$	16.5	$	58.3	992	3,600	4,592
Canada	5.2		0.1		5.3		188	52	240
Total	$	47.0	$	16.6	$	63.6	1,180	3,652	4,832

(a)

Digital display amounts (1) include displays reserved for transit agency use and (2) exclude: (i) all displays under our multimedia rights agreements with colleges, universities and other educational institutions; and (ii) 1,649 MetroCard vending machine digital screens. Our number of digital displays is impacted by acquisitions, dispositions, management agreements, the net effect of new and lost billboards, and the net effect of won and lost franchises in the period.

Our revenues and profits may fluctuate due to seasonal advertising patterns and influences on advertising markets. Typically, our revenues and profits are highest in the fourth quarter, during the holiday shopping season, and lowest in the first quarter, as advertisers adjust their spending following the holiday shopping season.

We have a diversified base of customers across various industries. During the three months ended March 31, 2019, our largest categories of advertisers were professional services, television and retail, which represented approximately 9%, 8% and 8% of our total U.S. Media segment revenues, respectively. During the three months ended March 31, 2018, our largest categories of advertisers were retail, television and healthcare/pharmaceuticals, each of which represented approximately 8% of our total U.S. Media segment revenues.

Our large-scale portfolio allows our customers to reach a national audience and also provides the flexibility to tailor campaigns to specific regions or markets. In the three months ended March 31, 2019, we generated approximately 40% of our U.S. Media segment revenues from national advertising campaigns compared to approximately 42% in the same prior-year period.

Our transit businesses requires us to periodically obtain and renew contracts with municipalities and other governmental entities. When these contracts expire, we generally must participate in highly competitive bidding processes in order to obtain or renew contracts.

Key Performance Indicators

Our management reviews our performance by focusing on the indicators described below.

Several of our key performance indicators are not prepared in conformity with Generally Accepted Accounting Principles in the United States of America (“GAAP”). We believe these non-GAAP performance indicators are meaningful supplemental measures of our operating performance and should not be considered in isolation of, or as a substitute for, their most directly comparable GAAP financial measures.

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	Three Months Ended March 31,						%
(in millions, except percentages)	2019			2018			Change
Revenues	$	371.7		$	337.9		10	%
Organic revenues^(a)(b)	371.7			337.2			10
Operating income	36.9			31.7			16
Adjusted OIBDA^(b)	86.8			81.2			7
Adjusted OIBDA^(b) margin	23		%	24		%
Funds from operations (“FFO”)^(b)	42.1			45.3			(7	)
Adjusted FFO (“AFFO”)^(b)	39.2			38.1			3
Net income	6.1			9.1			(33	)

(a)

Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”). We provide organic revenues to understand the underlying growth rate of revenue excluding the impact of non-organic revenue items. Our management believes organic revenues are useful to users of our financial data because it enables them to better understand the level of growth of our business period to period. Since organic revenues are not calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, revenues as an indicator of operating performance. Organic revenues, as we calculate it, may not be comparable to similarly titled measures employed by other companies.


(b)	See the “Reconciliation of Non-GAAP Financial Measures” and “Revenues” sections of this MD&A for reconciliations of Operating income to Adjusted OIBDA, Net income to FFO and AFFO and Revenues to organic revenues.

Adjusted OIBDA

We calculate Adjusted OIBDA as operating income (loss) before depreciation, amortization, net (gain) loss on dispositions, stock-based compensation and restructuring charges. We calculate Adjusted OIBDA margin by dividing Adjusted OIBDA by total revenues. Adjusted OIBDA and Adjusted OIBDA margin are among the primary measures we use for managing our business, evaluating our operating performance and planning and forecasting future periods, as each is an important indicator of our operational strength and business performance. Our management believes users of our financial data are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing, planning and executing our business strategy. Our management also believes that the presentations of Adjusted OIBDA and Adjusted OIBDA margin, as supplemental measures, are useful in evaluating our business because eliminating certain non-comparable items highlight operational trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. It is management’s opinion that these supplemental measures provide users of our financial data with an important perspective on our operating performance and also make it easier for users of our financial data to compare our results with other companies that have different financing and capital structures or tax rates.

FFO and AFFO

We calculate FFO in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO reflects net income (loss) adjusted to exclude gains and losses from the sale of real estate assets, depreciation and amortization of real estate assets, amortization of direct lease acquisition costs and the same adjustments for our equity-based investments, as well as the related income tax effect of adjustments, as applicable. We calculate AFFO as FFO adjusted to include cash paid for direct lease acquisition costs as such costs are generally amortized over a period ranging from four weeks to one year and therefore are incurred on a regular basis. AFFO also includes cash paid for maintenance capital expenditures since these are routine uses of cash that are necessary for our operations. In addition, AFFO excludes restructuring charges, as well as certain non-cash items, including non-real estate depreciation and amortization, stock-based compensation expense, accretion expense, the non-cash effect of straight-line rent and amortization of deferred financing costs, and the non-cash portion of income taxes, as well as the related income tax effect of adjustments, as applicable. We use FFO and AFFO measures for managing our business and for planning and forecasting future periods, and each is an important indicator of our operational strength and business performance, especially compared to other REITs. Our management believes users of our financial data are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing, planning and executing our business strategy. Our management also believes that the presentations of FFO and AFFO, as supplemental measures, are useful in evaluating our business because adjusting results to reflect items that have more bearing on the operating performance of REITs highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. It is management’s opinion that these supplemental measures provide users of our financial data with an important perspective on our operating per

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formance and also make it easier to compare our results to other companies in our industry, as well as to REITs.

Since Adjusted OIBDA, Adjusted OIBDA margin, FFO and AFFO are not measures calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, operating income (loss), net income (loss) and revenues, the most directly comparable GAAP financial measures, as indicators of operating performance. These measures, as we calculate them, may not be comparable to similarly titled measures employed by other companies. In addition, these measures do not necessarily represent funds available for discretionary use and are not necessarily a measure of our ability to fund our cash needs.

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Reconciliation of Non-GAAP Financial Measures

The following table reconciles Operating income to Adjusted OIBDA, and Net income to FFO and AFFO.



	Three Months Ended
	March 31,
(in millions, except per share amounts)	2019			2018
Total revenues	$	371.7		$	337.9

Operating income	$	36.9		$	31.7
Restructuring charges	0.3			1.1
Net gain on dispositions	(1.5		)	(0.2		)
Depreciation	21.1			21.1
Amortization	24.7			22.5
Stock-based compensation	5.3			5.0
Adjusted OIBDA	$	86.8		$	81.2
Adjusted OIBDA margin	23		%	24		%

Net income	$	6.1		$	9.1
Depreciation of billboard advertising structures	16.3			17.0
Amortization of real estate-related intangible assets	10.9			10.6
Amortization of direct lease acquisition costs	10.3			8.7
Net gain on disposition of real estate assets	(1.5		)	(0.2		)
Adjustment related to equity-based investments	—			0.1
FFO	$	42.1		$	45.3

FFO	$	42.1		$	45.3
Non-cash portion of income taxes	(1.8		)	(6.9		)
Cash paid for direct lease acquisition costs	(14.0		)	(12.5		)
Maintenance capital expenditures	(4.1		)	(3.1		)
Restructuring charges	0.3			1.1
Other depreciation	4.8			4.1
Other amortization	3.5			3.2
Stock-based compensation	5.3			5.0
Non-cash effect of straight-line rent	1.1			0.1
Accretion expense	0.6			0.6
Amortization of deferred financing costs	1.4			1.4
Income tax effect of adjustments^(a)	—			(0.2		)
AFFO	$	39.2		$	38.1


(a)	Income tax effect related to Restructuring charges.

FFO in the three months ended March 31, 2019, of $42.1 million decreased $3.2 million, or 7%, compared to the same prior-year period, primarily due to lower net income. AFFOin the three months ended March 31, 2019, of $39.2 million increased $1.1 million, or 3%, compared to the same prior-year period, due to higher operating income, partially offset by higher interest expense, higher cash paid for direct lease acquisition costs and higher maintenance capital expenditures.

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Analysis of Results of Operations

Revenues

We derive Revenues primarily from providing advertising space to customers on our advertising structures and sites. Our contracts with customers generally cover periods ranging from four weeks to one year. Revenues from billboard displays are recognized as rental income on a straight-line basis over the contract term. Transit and other revenues are recognized over the contract period. (See Note 11. Revenues to the Consolidated Financial Statements.)



	Three Months Ended March 31,				%
(in millions, except percentages)	2019		2018		Change
Revenues:
Billboard	$	251.0	$	239.3	5	%
Transit and other	120.7		$	98.6	22
Total revenues	$	371.7	$	337.9	10

Organic revenues^(a):
Billboard	$	251.0	$	238.7	5
Transit and other	120.7		98.5		23
Total organic revenues^(a)	371.7		337.2		10
Non-organic revenues:
Billboard	—		0.6		*
Transit and other	—		0.1		*
Total non-organic revenues	—		0.7		*
Total revenues	$	371.7	$	337.9	10


•	Calculation is not meaningful.


(a)	Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”).

Total revenues increased by $33.8 million, or 10%, and organic revenues increased $34.5 million, or 10%, in the three months ended March 31, 2019, compared to the same prior-year period.

In the three months ended March 31, 2018, non-organic revenues reflect the impact of foreign currency exchange rates.

Total billboard revenues increased $11.7 million, or 5%, in the three months ended March 31, 2019, compared to the same prior-year period, principally driven by an increase in average revenue per display (yield) and the conversion of traditional static billboard displays to digital billboard displays.

Organic billboard revenues in the three months ended March 31, 2019, increased $12.3 million, or 5%, compared to the same prior-year period, due to an increase in average revenue per display (yield) and the conversion of traditional static billboard displays to digital billboard displays.

Total transit and other revenues increased $22.1 million, or 22%, in the three months ended March 31, 2019, compared to the same prior-year period, driven by an increase in average revenue per display (yield), growth in digital displays, an increase in third-party digital equipment sales and the net effect of won and lost franchises in the period (primarily the San Francisco Bay Area Rapid Transit (“BART”) transit franchise).

The increase in organic transit and other revenues in the three months ended March 31, 2019, compared to the same prior-year period, is due to an increase in average revenue per display (yield), growth in digital displays, an increase in third-party digital equipment sales and the net effect of won and lost franchises in the period (primarily the BART transit franchise).

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Expenses



	Three Months Ended March 31,						%
(in millions, except percentages)	2019			2018			Change
Expenses:
Operating	$	216.9		$	197.1		10	%
Selling, general and administrative	73.3			64.6			13
Restructuring charges	0.3			1.1			(73	)
Net gain on dispositions	(1.5		)	(0.2		)	*
Depreciation	21.1			21.1			—
Amortization	24.7			22.5			10
Total expenses	$	334.8		$	306.2		9


*	Calculation is not meaningful.

Operating Expenses



	Three Months Ended March 31,				%
(in millions, except percentages)	2019		2018		Change
Operating expenses:
Billboard property lease	$	96.0	$	93.5	3	%
Transit franchise	58.1		47.3		23
Posting, maintenance and other	62.8		56.3		12
Total operating expenses	$	216.9	$	197.1	10

Billboard property lease expenses represented 38% of billboard revenues in the three months ended March 31, 2019, and 39% in the same prior-year period.

Transit franchise expenses represented 61% of transit display revenues in the three months ended March 31, 2019 and 60% in the same prior-year period. The increase in transit franchise expenses in the three months ended March 31, 2019, compared to the same prior-year period, was primarily due to increased costs related to the New York Metropolitan Transportation Authority (“MTA”) agreement as a result of increased transit revenues and increased costs related to the new BART transit franchise agreement.

Billboard property lease and transit franchise expenses increased by $13.3 million in the three months ended March 31, 2019, compared to the same prior-year period.

Posting, maintenance and other expenses increased $6.5 million, or 12%, in the three months ended March 31, 2019, compared to the same prior-year period, primarily due to higher costs related to third-party equipment sales, higher expenses related to our Sports Marketing operating segment and higher posting and rotation costs.

Selling, General and Administrative Expenses (“SG&A”)

SG&A expenses represented 20% of Revenues in the three months ended March 31, 2019, and 19% in the three months ended March 31, 2018. SG&A expenses increased $8.7 million, or 13%, in the three months ended March 31, 2019, compared to the same prior-year period, primarily due to higher compensation and other employee-related costs, higher bad debt expense and higher consulting and other professional fees.

Net Gain on Dispositions

Net gain on dispositions was $1.5 million for the three months ended March 31, 2019, compared to $0.2 million for the same prior-year period. The gain for the three months ended March 31, 2019, primarily related to the sale of an office location.

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Depreciation

Depreciation was flat in the three months ended March 31, 2019, compared to the same prior-year period.

Amortization

Amortization increased $2.2 million, or 10%, in the three months ended March 31, 2019, compared to the same prior-year period, principally driven by higher direct lease acquisition costs and higher amortization of intangible assets. Amortization of direct lease acquisition costs was $10.3 million in the three months ended March 31, 2019 and $8.7 million in the three months ended March 31, 2018. Capitalized direct lease acquisition costs were $10.3 million in the three months ended March 31, 2019 and $8.7 million in the three months ended March 31, 2018.

Interest Expense, Net

Interest expense, net, was $32.7 million (including $1.4 million of deferred financing costs) in the three months ended March 31, 2019, and $30.0 million (including $1.4 million of deferred financing costs) in the same prior-year period. The increase in Interest expense, net, was primarily due to higher interest rates and a higher outstanding average debt balance.

Benefit for Income Taxes

Benefit for income taxes was $1.0 million in the three months ended March 31, 2019, a decrease of $5.7 million compared to the same prior-year period, due primarily to improved performance in Canada.

Net Income

Net income was $6.1 million in the three months ended March 31, 2019, a decrease of $3.0 million compared to the same prior-year period, due primarily to a lower benefit for income taxes and higher interest expense, partially offset by higher operating income.

Segment Results of Operations

We present Adjusted OIBDA as the primary measure of profit and loss for our reportable segments. (See the “Key Performance Indicators” section of this MD&A and Note 19. Segment Information to the Consolidated Financial Statements.)

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The following table presents our Revenues, Adjusted OIBDA and Operating income (loss) by segment in the three months ended March 31, 2019 and 2018.



	Three Months Ended
	March 31,
(in millions)	2019			2018
Revenues:
U.S. Media	$	338.4		$	309.9
Other	33.3			28.0
Total revenues	371.7			337.9

Operating income	$	36.9		$	31.7
Restructuring charges	0.3			1.1
Net gain on dispositions	(1.5		)	(0.2		)
Depreciation	21.1			21.1
Amortization	24.7			22.5
Stock-based compensation	5.3			5.0
Total Adjusted OIBDA	$	86.8		$	81.2

Adjusted OIBDA:
U.S. Media	$	94.6		$	88.9
Other	1.2			(0.8		)
Corporate	(9.0		)	(6.9		)
Total Adjusted OIBDA	$	86.8		$	81.2

Operating income (loss):
U.S. Media	$	55.5		$	50.6
Other	(4.0		)	(7.0		)
Corporate	(14.6		)	(11.9		)
Total operating income	$	36.9		$	31.7

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U.S. Media



	Three Months Ended March 31,						%
(in millions, except percentages)	2019			2018			Change
Revenues:
Billboard	$	236.2		$	226.3		4	%
Transit and other	102.2			83.6			22
Total revenues	338.4			309.9			9
Operating expenses	(193.4		)	(175.5		)	10
SG&A expenses	(50.4		)	(45.5		)	11
Adjusted OIBDA	$	94.6		$	88.9		6
Adjusted OIBDA margin	28		%	29		%

Operating income	$	55.5		$	50.6		10
Restructuring charges	—			0.5			*
Net gain on dispositions	(1.5		)	(0.2		)	*
Depreciation and amortization	40.6			38.0			7
Adjusted OIBDA	$	94.6		$	88.9		6


*	Calculation is not meaningful.

Total U.S. Media segment revenues increased $28.5 million, or 9%, in the three months ended March 31, 2019, compared to the same prior-year period.

Total U.S. Media segment revenue increased 9% in the three months ended March 31, 2019, reflecting an increase in average revenue per display (yield), the conversion of traditional static billboard displays to digital billboard displays and growth in transit digital displays. In the three months ended March 31, 2019, we generated approximately 40% of our U.S. Media segment revenues from national advertising campaigns compared to approximately 42% in the same prior-year period.

Revenues from U.S. Media segment billboards increased $9.9 million, or 4%, in the three months ended March 31, 2019, compared to the same prior-year period, reflecting an increase in average revenue per display (yield) and the conversion of traditional static billboard displays to digital billboard displays.

Transit and other revenues in the U.S. Media segment increased $18.6 million, or 22%, in the three months ended March 31, 2019, compared to the same prior-year period, reflecting an increase in average revenue per display (yield), growth in digital displays and the net effect of won and lost franchises in the period (primarily the BART transit franchise).

U.S. Media segment operating expenses increased $17.9 million, or 10%, in the three months ended March 31, 2019, compared to the same prior-year period, primarily due to increased costs related to the MTA agreement as a result of increased transit revenues and increased costs related to the new BART transit franchise agreement, and an increase in billboard lease costs. U.S. Media segment SG&A expenses increased $4.9 million, or 11%, in the three months ended March 31, 2019, compared to the same prior-year period, primarily due to higher compensation and other employee-related costs and higher professional fees.

U.S. Media segment Adjusted OIBDA increased $5.7 million, or 6%, in the three months ended March 31, 2019, compared to the same prior-year period. Adjusted OIBDA margin was 28% in the three months ended March 31, 2019, and 29% in the three months ended March 31, 2018.

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Other



	Three Months Ended March 31,						%
(in millions, except percentages)	2019			2018			Change
Revenues:
Billboard	$	14.8		$	13.0		14	%
Transit and other	18.5			15.0			23
Total revenues	$	33.3		$	28.0		19

Organic revenues^(a):
Billboard	$	14.8		$	12.4		19
Transit and other	18.5			14.9			24
Total organic revenues^(a)	33.3			27.3			22
Non-organic revenues:
Billboard	—			0.6			*
Transit and other	—			0.1			*
Total non-organic revenues	—			0.7			*
Total revenues	33.3			28.0			19
Operating expenses	(23.5		)	(21.6		)	9
SG&A expenses	(8.6		)	(7.2		)	19
Adjusted OIBDA	$	1.2		$	(0.8	)	*
Adjusted OIBDA margin	4		%	(3		)%

Operating loss	$	(4.0	)	$	(7.0	)	(43	)
Restructuring charges	—			0.6			*
Depreciation and amortization	5.2			5.6			(7	)
Adjusted OIBDA	$	1.2		$	(0.8	)	*


*	Calculation is not meaningful.


(a)	Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”).

Total Other revenues increased $5.3 million, or 19%, in the three months ended March 31, 2019, compared to the same prior-year period, reflecting an increase in third-party digital sales and improved performance in Canada.

Other operating expenses increased $1.9 million, or 9%, in the three months ended March 31, 2019, compared to the same prior-year period, driven by higher costs related to third-party digital equipment sales. Other SG&A expenses increased $1.4 million, or 19%, in the three months ended March 31, 2019, compared to the prior-year period, primarily driven by higher expenses related to our Sports Marketing operating segment.

Other Adjusted OIBDA was $1.2 million in the three months ended March 31, 2019, compared to an Other Adjusted OIBDA loss of $0.8 million in the same prior-year period, primarily driven by improved performance in Canada.

Corporate

Corporate expenses primarily include expenses associated with employees who provide centralized services. Corporate expenses, excluding stock-based compensation, were $9.0 million in the three months ended March 31, 2019, compared to $6.9 million in the same prior-year period, primarily due to higher compensation-related expenses.

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Liquidity and Capital Resources



	As of
(in millions, except percentages)	March 31, 2019			December 31, 2018		% Change
Assets:
Cash and cash equivalents	$	52.7		$	52.7	—	%
Restricted cash	1.4			1.4		—
Receivables, less allowance ($10.7 in 2019 and $10.7 in 2018)	229.1			264.9		(14	)
Prepaid lease and transit franchise costs	13.4			69.3		(81	)
Prepaid MTA equipment deployment costs	31.1			18.9		65
Other prepaid expenses	15.3			13.9		10
Other current assets	8.7			8.4		4
Total current assets	351.7			429.5		(18	)
Liabilities:
Accounts payable	53.3			56.5		(6	)
Accrued compensation	24.4			47.1		(48	)
Accrued interest	26.0			19.1		36
Accrued lease and transit franchise costs	40.7			44.2		(8	)
Other accrued expenses	32.9			31.2		5
Deferred revenues	37.3			29.8		25
Short-term debt	155.0			160.0		(3	)
Short-term operating lease liabilities	153.8			—		*
Other current liabilities	15.1			14.7		3
Total current liabilities	538.5			402.6		34
Working capital (deficit)	$	(186.8	)	$	26.9	*


•	Calculation is not meaningful.

We continually project anticipated cash requirements for our operating, investing and financing needs as well as cash flows generated from operating activities available to meet these needs. Due to seasonal advertising patterns and influences on advertising markets, our revenues and operating income are typically highest in the fourth quarter, during the holiday shopping season, and lowest in the first quarter, as advertisers adjust their spending following the holiday shopping season. Further, certain of our municipal transit contracts, as well as our marketing and multimedia rights agreements with colleges and universities, require guaranteed minimum annual payments to be paid at the beginning of the year.

Our short-term cash requirements primarily include payments for operating leases, guaranteed minimum annual payments, capital expenditures, equipment deployment costs, interest and dividends. Funding for short-term cash needs will come primarily from our cash on hand, operating cash flows, our ability to issue debt and equity securities, and borrowing capacity under the Revolving Credit Facility (as defined below), the AR Securitization Facilities (as defined below) or other secured credit facilities that we may establish.

In addition, as part of our growth strategy, we frequently evaluate strategic opportunities to acquire new businesses, assets or digital technology. Consistent with this strategy, we regularly evaluate potential acquisitions, ranging from small transactions to larger acquisitions, which transactions could be funded through cash on hand, additional borrowings, equity or other securities, or some combination thereof.

Our long-term cash needs include principal payments on outstanding indebtedness and commitments related to operating leases and franchise and other agreements, including any related guaranteed minimum annual payments, and equipment deployment costs. Funding for long-term cash needs will come from our cash on hand, operating cash flows, our ability to issue debt and equity securities, and borrowing capacity under the Revolving Credit Facility or other secured credit facilities that we may establish.

The working capital deficit as of March 31, 2019, is primarily due to the impact of the adoption of the new lease accounting standard (see Note 2. New Accounting Standards to the Consolidated Financial Statements), which resulted in the recognition of

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short-term operating lease liabilities and a decline in Prepaid lease and transit franchise costs on our Consolidated Statement of Financial Position.

Under the MTA agreement, we are obligated to deploy, over a number of years, (i) 8,565 digital advertising screens on subway and train platforms and entrances, (ii) 37,716 smaller-format digital advertising screens on rolling stock, and (iii) 7,829 MTA communications displays. In addition, we are obligated to pay to the MTA the greater of a percentage of revenues or a guaranteed minimum annual payment. Incremental revenues that exceed an annual base revenue amount will be retained by us for the cost of deploying advertising and communications displays throughout the transit system. As presented in the table below, MTA equipment deployment costs are being recorded as Prepaid MTA equipment deployment costs and Intangible assets on our Consolidated Statement of Financial Position, and as these costs are recouped from incremental revenues that the MTA would otherwise be entitled to receive, Prepaid MTA equipment deployment costs will be reduced. If incremental revenues generated over the term of the agreement are not sufficient to cover all or a portion of the equipment deployment costs, the costs will not be recouped, which could have an adverse effect on our business, financial condition and results of operation. We expect to utilize incremental third-party financing of approximately $350.0 million within the original four-year time frame to fund equipment deployment costs. As of March 31, 2019, our letters of credit for the benefit of the MTA aggregated approximately $136.0 million, which amount is subject to change as equipment installations are completed and revenues are generated. As indicated in the table below, we incurred $32.9 million related to MTA equipment deployment costs in the three months ended March 31, 2019 (which includes equipment deployment costs related to future deployments), for a total of $129.7 million to date, of which $6.1 million had been recouped from incremental revenues to date. As of March 31, 2019, 1,964 digital displays had been installed, of which 735 installations occurred in the three months ended March 31, 2019. For the full year of 2019, we expect our MTA equipment deployment costs to be approximately $175.0 million. In addition, we expect transit franchise operating expenses to gradually increase if our revenues increase over an annual base revenue amount.



(in millions)	Beginning Balance		Deployment Costs Incurred		Recoupment			Amortization			Ending Balance
Three months ended March 31, 2019:
Prepaid MTA equipment deployment costs	$	79.5	$	27.1	$	(4.4	)	$	—		$	102.2
Intangible assets (franchise agreements)	14.8		5.8		—			(0.5		)	20.1
Total	$	94.3	$	32.9	$	(4.4	)	$	(0.5	)	$	122.3

Year ended December 31, 2018:
Prepaid MTA equipment deployment costs	$	4.7	$	76.5	$	(1.7	)	$	—		$	79.5
Intangible assets (franchise agreements)	0.9		14.7		—			(0.8		)	14.8
Total	$	5.6	$	91.2	$	(1.7	)	$	(0.8	)	$	94.3

As of March 31, 2019, we had total indebtedness of $2.4 billion.

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Debt

Debt, net, consists of the following:



	As of
(in millions, except percentages)	March 31, 2019			December 31, 2018
Short-term debt:
AR Facility	$	80.0		$	85.0
Repurchase Facility	75.0			75.0
Total short-term debt	155.0			160.0

Long-term debt:
Revolving credit facility	35.0			—
Term loan, due 2024	668.2			668.1

Senior unsecured notes:
5.250% senior unsecured notes, due 2022	549.7			549.7
5.625% senior unsecured notes, due 2024	502.1			502.2
5.875% senior unsecured notes, due 2025	450.0			450.0
Total senior unsecured notes	1,501.8			1,501.9

Debt issuance costs	(19.3		)	(20.4		)
Total long-term debt, net	2,185.7			2,149.6

Total debt, net	$	2,340.7		$	2,309.6

Weighted average cost of debt	5.1		%	5.1		%



	Payments Due by Period
(in millions)	Total		2019		2020-2021		2022-2023		2024 and thereafter
Long-term debt	$	2,205.0	$	—	$	—	$	585.0	$	1,620.0
Interest	586.6		122.7		233.7		177.3		52.9
Total	$	2,791.6	$	122.7	$	233.7	$	762.3	$	1,672.9

Term Loan

Revolving Credit Facility

We also have a $430.0 million revolving credit facility, which matures in 2022 (the “Revolving Credit Facility,” together with the Term Loan, the “Senior Credit Facilities”).

As of March 31, 2019, there were $35.0 million of outstanding borrowings under the Revolving Credit Facility, at a borrowing rate of approximately 4.5%.

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Standalone Letter of Credit Facilities

Accounts Receivable Securitization Facilities

Senior Unsecured Notes

Debt Covenants

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Deferred Financing Costs

Interest Rate Swap Agreements

We are subject to interest rate risk to the extent we have variable-rate debt outstanding, including under our Senior Credit Facilities and the AR Securitization Facilities.

At-the-Market Equity Offering Program

We have a sales agreement in connection with an “at-the-market” equity offering program (the “ATM Program”), under which we may, from time to time, issue and sell shares of our common stock up to an aggregate offering price of $300.0 million. We have no obligation to sell any of our common stock under the sales agreement and may at any time suspend solicitations and offers under the sales agreement. During the three months ended March 31, 2019, 750,000 shares of our common stock were sold under the ATM Program for gross proceeds of $17.0 million with commissions of $0.3 million, for total net proceeds of $16.7 million. As of March 31, 2019, approximately $267.5 million of capacity remaining under the ATM Program.

Cash Flows

The following table presents our cash flows in the three months ended March 31, 2019 and 2018.



	Three Months Ended March 31,						%
(in millions, except percentages)	2019			2018			Change
Cash provided by operating activities	$	41.4		$	62.1		(33	)%
Cash used for investing activities	(28.7		)	(22.1		)	30
Cash used for financing activities	(12.8		)	(35.6		)	(64	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	0.1			(0.2		)	*
Net increase in cash, cash equivalents and restricted cash	$	—		$	4.2		(100	)


*	Calculation is not meaningful.

Cash provided by operating activities decreased $20.7 million in the three months ended March 31, 2019, compared to the same prior-year period, principally as a result of prepaid MTA equipment deployment costs and the timing of collections in accounts receivables compared to the same prior year period. In the three months ended March 31, 2019, we paid $27.1 million

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related to MTA equipment deployment costs and installed 735 digital displays. In the three months ended March 31, 2019, we recouped $4.4 million of MTA equipment deployment costs from incremental revenues. In the three months ended March 31, 2018, we paid $7.2 million related to MTA equipment deployment costs.

Cash used for investing activities increased $6.6 million in the three months ended March 31, 2019, compared to the same prior-year period. In the three months ended March 31, 2019, we incurred $18.1 million in capital expenditures and total cash payments of approximately $7.5 million related to acquisitions. In the three months ended March 31, 2018, we incurred $16.8 million in capital expenditures and completed several acquisitions for total cash payments of approximately $4.1 million.

The following table presents our capital expenditures in the three months ended March 31, 2019 and 2018.



	Three Months Ended March 31,				%
(in millions, except percentages)	2019		2018		Change
Growth	$	14.0	$	13.7	2	%
Maintenance	4.1		3.1		32
Total capital expenditures	$	18.1	$	16.8	8

Capital expenditures increased $1.3 million, or 8%, in the three months ended March 31, 2019, compared to the same prior-year period, as we continue to spend on digital billboard and/or transit displays, as well as improvements to our technology platform, partially offset by lower spending on improvements to our static displays.

For the full year of 2019, we expect our capital expenditures to be approximately $80.0 million, which will be used primarily for maintenance, growth in digital displays, installation of the most current LED lighting technology to improve the quality and extend the life of our static billboards, and to renovate certain office facilities. This estimate does not include equipment deployment costs that will be incurred in connection with the MTA agreement (as described above), which will be recorded as Prepaid MTA equipment deployment costs and Intangible assets on our Consolidated Statement of Financial Position, as applicable.

Cash used for financing activities decreased $22.8 million in the three months ended March 31, 2019, compared to the same prior-year period. In the three months ended March 31, 2019, we drew net borrowings of $35.0 million on the Revolving Credit Facility, received net proceeds of $16.6 million related to the sale of our common stock under the ATM Program, drew net borrowings of $5.0 million on the AR Securitization Facilities and paid cash dividends of $51.8 million. In the three months ended March 31, 2018, we drew $10.0 million on the Revolving Credit Facility, drew net borrowings of $12.0 million on the AR Facility and paid cash dividends of $51.1 million.

Cash paid for income taxes was $0.8 million for the three months ended March 31, 2019, compared to $0.2 million for the three months ended March 31, 2018.

Off-Balance Sheet Arrangements

Our off-balance sheet commitments primarily consist of guaranteed minimum annual payments. (See Note 18. Commitments and Contingencies to the Consolidated Financial Statements for information about our off-balance sheet commitments.)

Critical Accounting Policies

The preparation of our financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. On an ongoing basis, we evaluate these estimates, which are based on historical experience and on various assumptions that we believe are reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of revenues and expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions.

We consider the following accounting policy to be the most critical as it is significant to our financial condition and results of operations, and requires significant judgment and estimates on the part of management in its application. For a summary of our significant accounting policies, see Item 8., Note 2. Summary of Significant Accounting Policies to the Consolidated Financial Statements.

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MTA Agreement

As title of the various digital displays transfers to the MTA on installation, the cost of deploying these screens throughout the transit system does not represent our property and equipment. The portion of deployment costs expected to be reimbursed from transit franchise fees that would otherwise be payable to the MTA are recorded as Prepaid MTA equipment deployment costs on the Consolidated Statement of Financial Position and charged to operating expenses as advertising revenue is generated. The short-term portion of Prepaid MTA equipment deployment costs represents the costs that we expect to recover from the MTA in the next twelve months. The portion of deployment costs expected to be reimbursed from advertising revenues that would otherwise be retained by us under the contract are recorded as Intangible assets on the Consolidated Statement of Financial Position and charged to amortization expense on a straight line basis over the contract period.

If we do not generate sufficient advertising revenues from the MTA contract, there is a risk that the related Prepaid MTA equipment deployment costs and Intangible assets may not be recoverable. Impairment triggers for these assets are assessed on a quarterly basis. Based on our latest revenue projections, no impairment triggers were identified.

Accounting Standards

See Note 2. New Accounting Standards to the Consolidated Financial Statements for information about the adoption of new accounting standards and recent accounting pronouncements.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

We have made statements in this MD&A and other sections of this Quarterly Report on Form 10-Q that are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “could,” “would,” “may,” “might,” “will,” “should,” “seeks,” “likely,” “intends,” “plans,” “projects,” “predicts,” “estimates,” “forecast” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions related to our capital resources, portfolio performance and results of operations.

Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and may not be able to be realized. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:


•	Declines in advertising and general economic conditions;


•	Competition;


•	Government regulation;


•	Our inability to increase the number of digital advertising displays in our portfolio;


•	Our ability to implement our digital display platform and deploy digital advertising displays to our transit franchise partners;


•	Taxes, fees and registration requirements;


•	Our ability to obtain and renew key municipal contracts on favorable terms;


•	Decreased government compensation for the removal of lawful billboards;


•	Content-based restrictions on outdoor advertising;


•	Environmental, health and safety laws and regulations;


•	Seasonal variations;


•	Acquisitions and other strategic transactions that we may pursue could have a negative effect on our results of operations;


•	Dependence on our management team and other key employees;


•	The ability of our board of directors to cause us to issue additional shares of stock without stockholder approval;

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•	Certain provisions of Maryland law may limit the ability of a third party to acquire control of us;


•	Our rights and the rights of our stockholders to take action against our directors and officers are limited;


•	Our substantial indebtedness;


•	Restrictions in the agreements governing our indebtedness;


•	Incurrence of additional debt;


•	Interest rate risk exposure from our variable-rate indebtedness;


•	Our ability to generate cash to service our indebtedness;


•	Cash available for distributions;


•	Hedging transactions;


•	Diverse risks in our Canadian business;


•	A breach of our security measures;


•	Changes in regulations and consumer concerns regarding privacy, information security and data, or any failure or perceived failure to comply with these regulations or our internal policies;


•	Asset impairment charges for our long-lived assets and goodwill;


•	Our failure to remain qualified to be taxed as a real estate investment trust (“REIT”);


•	REIT distribution requirements;


•	Availability of external sources of capital;


•	We may face other tax liabilities even if we remain qualified to be taxed as a REIT;


•	Complying with REIT requirements may cause us to liquidate investments or forgo otherwise attractive opportunities;


•	Our ability to contribute certain contracts to a taxable REIT subsidiary (“TRS”);


•	Our planned use of TRSs may cause us to fail to remain qualified to be taxed as a REIT;


•	REIT ownership limits;


•	Complying with REIT requirements may limit our ability to hedge effectively;


•	Failure to meet the REIT income tests as a result of receiving non-qualifying income;


•	Even if we remain qualified to be taxed as a REIT, and we sell assets before July 17, 2019, we could be subject to tax on any unrealized net built-in gains in the assets held before electing to be treated as a REIT;


•	The Internal Revenue Service (the “IRS”) may deem the gains from sales of our outdoor advertising assets to be subject to a 100% prohibited transaction tax;


•	Establishing operating partnerships as part of our REIT structure; and


•	U.S. federal tax reform legislation could affect us in ways that are difficult to anticipate.

While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements in this Quarterly Report on Form 10-Q apply as of the date of this report or as of the date they were made and, except as required by applicable law, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 27, 2019. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk related to commodity prices and foreign currency exchange rates, and to a limited extent, interest rates and credit risks.

Commodity Price Risk

We incur various operating costs that are subject to price risk caused by volatility in underlying commodity values. Commodity price risk is present in electricity costs associated with powering our digital billboard displays and lighting our traditional static billboard displays at night.

We do not currently use derivatives or other financial instruments to mitigate our exposure to commodity price risk. However, we do enter into contracts with commodity providers to limit our exposure to commodity price fluctuations. For the year ended December 31, 2018, such contracts accounted for 18.9% of our total utility costs. As of May 7, 2019, we had active electricity purchase agreements with fixed contract rates for locations throughout Connecticut, Illinois, New Jersey, New York, Pennsylvania, Ohio and Texas, which expire at various dates until February 2022.

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Foreign Exchange Risk

Foreign currency translation risk is the risk that exchange rate gains or losses arise from translating our Canadian business’s statements of earnings and statements of financial position from functional currency to our reporting currency (the U.S. Dollar) for consolidation purposes. Any gain or loss on translation is included within comprehensive income and Accumulated other comprehensive income on our Consolidated Statement of Financial Position. The functional currency of our international subsidiaries is their respective local currency. As of March 31, 2019, we have $10.1 million of unrecognized foreign currency translation losses included within Accumulated other comprehensive loss on our Consolidated Statement of Financial Position.

Substantially all of our transactions at our Canadian subsidiary are denominated in their local functional currency, thereby reducing our risk of foreign currency transaction gains or losses.

We do not currently use derivatives or other financial instruments to mitigate foreign currency risk, although we may do so in the future.

Interest Rate Risk

We are subject to interest rate risk to the extent we have variable-rate debt outstanding including under the Senior Credit Facilities and the AR Securitization Facilities.

As of March 31, 2019, we had a $670.0 million variable-rate Term Loan due 2024 outstanding, which has an interest rate of 4.5% per year. An increase or decrease of 1/4% in our interest rate on the Term Loan will change our annualized interest expense by approximately $1.3 million.

As of March 31, 2019, we had $35.0 million of outstanding borrowings under the Revolving Credit Facility, at a borrowing rate of approximately 4.5%. An increase or decrease of 1/4% in our interest rate on the Revolving Credit Facility will change our annualized interest expense by approximately $0.1 million.

As of March 31, 2019, we had $80.0 million of outstanding borrowings under our variable-rate AR Facility, at a borrowing rate of approximately 3.5% and $75.0 million of outstanding borrowings under our variable-rate Repurchase Facility, at a borrowing rate of approximately 3.7%. An increase or decrease of 1/4% in our interest rate on the AR Securitization Facilities will change our annualized interest expense by approximately $0.4 million.

We have several interest rate cash flow swap agreements to effectively convert a portion of our LIBOR-based variable rate debt to a fixed rate. The fair value of these swap positions was a net unrecognized loss of approximately $3.2 million as of March 31, 2019, and is included in Other liabilities on our Consolidated Statement of Financial Position. The following table provides information about our interest rate swap agreements, which are sensitive to changes in interest rates. Notional amounts are used to calculate the contractual cash flows to be exchanged under the agreements.



(in millions, except percentages)	2020			2021			2022			2023			2024			Thereafter			Total		Fair Value Loss as of 3/31/19
Pay fixed/receive variable	$	—		$	150.0		$	—		$	—		$	—		$	—		$	150.0	$	3.2
Average pay rate	3.0		%	3.0		%	—		%	—		%	—		%	—		%
Average receive rate^(a)	one-month LIBOR			one-month LIBOR			—			—			—			—


(a)	The one-month LIBOR rate was approximately 2.5% as of March 31, 2019.

Credit Risk

In the opinion of our management, credit risk is limited due to the large number of customers and advertising agencies utilized. We perform credit evaluations on our customers and agencies and believe that the allowances for doubtful accounts are adequate. We do not currently use derivatives or other financial instruments to mitigate credit risk.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

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As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management has carried out an evaluation, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

In connection with the adoption of the new lease accounting standard, during the first quarter of 2019, we implemented a new lease administration and accounting system, and redesigned certain processes and internal controls relating to our lease portfolio. There have been no other changes in our internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act, during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Disclosure Controls and Procedures and Internal Control Over Financial Reporting

In designing and evaluating our disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II

Item 1. Legal Proceedings.

Item 1A. Risk Factors.

We have disclosed the risk factors affecting our business, results of operations and financial condition in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 27, 2019. There have been no material changes from the risk factors previously disclosed.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

None.

Purchases of Equity Securities by the Issuer



	Total Number of Shares Purchased^(a)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Remaining Authorizations
January 1, 2019 through January 31, 2019	2,710	$	20.13	—	—
February 1, 2019 through February 28, 2019	—	—		—	—
March 1, 2019 through March 31, 2019	—	—		—	—
Total	2,710	—		—	—


(a)	Reflects shares deemed to be surrendered by the Company in connection with tax withholding payments upon exercise of employee stock options at the related exercise prices.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

See Exhibit Index immediately following this Item, which is incorporated herein by reference.

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EXHIBIT INDEX



Exhibit Number		Description

3.1		Amended and Restated Bylaws of OUTFRONT Media Inc. (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-36367), filed on February 26, 2019).

10.1		Form of Certificate and Terms and Conditions for Performance-Based Restricted Share Units Awards with Time Vesting under the OUTFRONT Media Inc. Amended and Restated Omnibus Stock Incentive Plan (incorporated herein by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, File No. 001-36367).

10.2		Form of Certificate and Terms and Conditions for Restricted Share Units Awards with Time Vesting granted under the OUTFRONT Media Inc. Amended and Restated Omnibus Stock Incentive Plan (incorporated herein by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, File No. 001-36367).

31.1		Certification of the Chief Executive Officer of OUTFRONT Media Inc. pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer of OUTFRONT Media Inc. pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Chief Executive Officer of OUTFRONT Media Inc. furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.

32.2		Certification of the Chief Financial Officer of OUTFRONT Media Inc. furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.

101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Calculation Linkbase

101.DEF		XBRL Taxonomy Definition Document

101.LAB		XBRL Taxonomy Label Linkbase

101.PRE		XBRL Taxonomy Presentation Linkbase

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



OUTFRONT MEDIA INC.

By:	/s/ Matthew Siegel
	Name:	Matthew Siegel
	Title:	Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)

Date: May 8, 2019